In the national interest? The past, present and future of UK development policy by p4md

In the national interest? The past, present and future of UK development policy A report for the Global Development Challenge

April 2021

GLOBAL DEVELOPMENT CHALLENGE The Global Development Challenge, a research initiative of The Project for Modern Democracy, was set up in 2016 to investigate the effectiveness of foreign aid in promoting international development. Its first report (https://www.p4md.org/global-developmentchallenge/first-report) surveyed the broad and expanding academic literature on aid effectiveness. This second paper explores the history of Britain’s contribution to international development, including the role and performance of the Department for International Development (DFID) from 1997-2020. It also draws lessons from mergers of foreign ministries and development agencies in other countries, and presents possible directions for the future in light of the recent merger between DFID and the Foreign and Commonwealth Office (FCO). We are grateful to the Bill & Melinda Gates Foundation (http://www.gatesfoundation.org) for their support for the Global Development Challenge.

THE PROJECT FOR MODERN DEMOCRACY The Project for Modern Democracy (http://www.p4md.org) is an independent, non-party think tank set up in 2014 to promote more efficient government and good citizenship. It is a company limited by guarantee (no. 8472163) and a registered charity in England and Wales (no. 1154924).

THE AUTHORS The authors for this report are Christopher N Howarth, who authored the first paper ‘Does Development Aid Work?’ for the Global Development Challenge; Andrew Slinn, who has been a researcher at The Project for Modern Democracy since December 2018 working on projects involving international LGBT rights and civil service reform; and Matt Oliver, an Associate Director at The Project for Modern Democracy and global health consultant who is currently supporting a range of projects, including Ending Workplace TB .

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Contents Acronyms

Foreword

Executive Summary

I: The Colonial Origins of Britain’s Development Policies 1929-1964

1957 White Paper

1960 White Paper

1963 White Paper

Establishment of the Ministry of Overseas Development

Laying the foundations of the UK approach to development

II: The Evolution of Britain’s Development Policies 1964-1997

Ministry of Overseas Development 1964-1970

Ministry of Overseas Development 1970-1974

Ministry of Overseas Development 1974-1979

Conservative Government 1979-1997

The Pergau Dam Affair, 1993-1994

Towards an independent aid department

III: The Department for International Development 1997-2020

Policy context

Development thinking context – 1980s and 1990s

Labour’s development policies in opposition

1997 General Election and New Labour

Clare Short: Secretary of State for International Development (3 May 1997 – 12 May 2003)

Consolidating DFID’s responsibilities and more help for the poorest

1997 White Paper: Eliminating World Poverty

2000 Millennium Development Summit and the MDGs

2000 White Paper: Making Globalisation Work for the Poor

End of an era

Baroness Amos (12 May – 6 October 2003) and Hilary Benn (6 October 2003 – 27 June 2007) 61 The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Douglas Alexander (28 June 2007 – 11 May 2010)

Andrew Mitchell (12 May 2010 – 4 September 2012)

One World Conservatism

The manifesto bargain

Aid in the national interest

Reforming the CDC Group

Justine Greening (4 September 2012 – 14 July 2016)

Priti Patel (14 July 2016 – 8 November 2017)

Penny Mordaunt (9 November 2017 – 1 May 2019)

Rory Stewart (1 May – 24 July 2019) and Alok Sharma (24 July 2019 – 13 February 2020) 82 Anne-Marie Trevelyan (13 February – 2 September 2020)

IV: Was DFID a success?

International leadership

Soft power

Stewardship of public funds

Influence within UK government policy

Alignment with the national interest

How successful was DFID?

V: Global Britain

101

What is ODA?

103

Lessons from other countries

105

Canada

106

Australia

108

Further models

109

Next steps for the FCDO

111

Making aid work for the British people

113

The future aid strategy

118

Pandemic resilience

118

Data and technology

119

Multilaterals

120

Diagnostics and surveillance

120

Global health research and development

120

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A strategy for the future: opportunities for improvement How much should the UK spend on aid?

121 123

Tackling the deficit

124

Comparison with other countries

125

Strategic alignment

127

Greater impact

128

Will spending at 0.7 per cent be restored?

130

Recommendations

132

Annex 1: Current spending

139

Annex 2: The history of UK aid

142

References

143

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Acronyms ATP AusAID BEIS CA CD&W CDA CDAC CDC CIDA CRO DAC DFAT DFID DIT DTC DTI EU FCDO FCO G7/G8 GAC GFATM GNI/GNP IATI IBRD ICAI IDA IDC IGBA LDCs MDGs NGO Norad OAPEC ODA ODA/ODM ODI OECD OFC RBM SDGs TPA UAC UMICs UN UNCTAD UNDP UNESCO UNOCHA USAID WDM WHO

Aid and Trade Provision Australian Agency for International Development Department for Business, Energy and Industrial Strategy Commonwealth Assistance Colonial Development and Welfare Act Colonial Development Act/Colonial Development Fund Colonial Development Advisory Committee Colonial/Commonwealth Development Corporation Canadian International Development Agency Commonwealth Relations Office Development Assistance Committee Department of Foreign Affairs and Trade (Australia) Department for International Development Department for International Trade Department of Technical Co-operation Department of Trade and Industry European Union Foreign, Commonwealth & Development Office Foreign & Commonwealth Office Group of Seven/Group of Eight major developed countries Global Affairs Canada Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria Gross National Income/Gross National Product International Aid Transparency Initiative International Bank for Reconstruction and Development Independent Commission for Aid Impact International Development Association House of Commons International Development Select Committee Independent Group on British Aid Least-developed countries Millennium Development Goals Non-governmental organisation Norwegian Agency for Development Cooperation Organisation of Arab Petroleum Exporting Countries Official development assistance Overseas Development Administration/Ministry of Overseas Development Overseas Development Institute Organisation for Economic Co-operation and Development Overseas Food Corporation Results-based management Sustainable Development Goals The TaxPayers’ Alliance United Africa Company Upper-middle income countries United Nations UN Conference on Trade and Development UN Development Programme UN Education, Scientific and Cultural Organisation United Nations Office for the Coordination of Humanitarian Affairs United States Agency for International Development World Development Movement World Health Organisation

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Foreword By Nick Herbert

The United Kingdom has been a world leader in international development for decades. Our aid has saved millions of lives by funding emergency humanitarian relief, immunisation programmes against preventable diseases, education for children in fragile states, medical care for people suffering from neglected tropical diseases, the installation of hundreds of megawatts of clean energy, and access to modern family planning for millions of women and girls. The UK was the first G7 nation to reach and maintain the target to spend 0.7 per cent of national income on development, and the Department for International Development – with its unflinching mission to alleviate poverty – was recognised globally as leading from the front. The UK has a long history of aid provision. With roots in the early 20th century, British development policy began as economic assistance and technical co-operation with its Colonies, guided by an understanding that to foster growth was not just to the benefit of its colonial possessions but in the UK national interest, with rich opportunities in commerce and trade. With the fall of empire and the rise of multilateralism in the post-war international order, UK development policy would evolve under successive British governments to incorporate an understanding that aid should, first and foremost, be used to tackle global poverty. Differing views over whether the values of international development were conducive to UK strategic and commercial interests would frame the UK aid debate for the rest of the century. The foundation of DFID in 1997 marked a departure from the tensions of the past. As a standalone department with its own budget and cabinet minister, DFID’s commitment to end world poverty was deliberately separate from the diplomatic and commercial pursuits of other foreign policy departments in Whitehall. Over the next two decades, this mission led to unprecedented levels of aid spending – with the UK meeting 0.7 per cent in 2013, a target first agreed by the UN General Assembly in 1970 – but this drive to measure success through expenditure encouraged sustained allegations of profligacy and vanity projects from aid sceptics and some quarters of the UK press. Despite initiatives by Conservative The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

development secretaries to improve transparency and value for money for taxpayers, public support for the UK aid programme has declined over the past decade in the face of extreme financial challenges, fundamental shifts in political priorities, and a failure by successive administrations to mount a clear and reasoned defence of aid spending. The UK’s approach to international development has now fundamentally been reset by the current Government. After over two decades as an independent department, DFID has been merged with the Foreign Office to bring aid policy more in line with the strategic priorities of British foreign policy. This overarching strategy, ‘Global Britain’, is to provide the UK with a renewed international mission as it forges a new path outside of the European Union in a shifting global context. With the rise of China as an economic superpower, increasing geopolitical aggression from Russia, and tensions beginning to show in the multilateral system, Global Britain is the strategic embodiment of the UK national interest: defence of the international rules-based order through being a demonstrably open and outward-looking actor on the world stage. However, the Government is in danger of jeopardising the respect and power the UK commands in the exercise of international development policy. While a cohesive and efficient Whitehall structure is understandable in realising the goals of Global Britain, the Foreign, Commonwealth & Development Office must now navigate the risks of a departmental merger to ensure DFID’s aid expertise is not lost and the beneficiaries of UK aid are not impacted. Additionally, the economic pressures of the COVID-19 pandemic have provided a ready excuse for a one third cut in aid spending to 0.5 per cent of national income, which will not only lead to a material change for millions of people in partner countries but also endanger the perception of the UK as a leader internationally. The apparent downgrading of development contrasts unfavourably with the early priorities of President Biden, who has spoken of the importance of investment in diplomacy and international development, appointing a powerful USAID Administrator, Samantha Power, with a seat on the National Security Council. This report therefore comes at a critical time. From 2021, the UK will no longer be able to herald its 0.7 per cent achievement as a symbol of its global reach. The FCDO will also further consolidate its strategy for the next decade as part of the Government’s Integrated

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Review of Security, Defence, Development and Foreign Policy, which published its findings in March 2021. The recommendations in this report are reinforced by a comprehensive examination of the history and traditions of UK aid policy. They are designed to inform a successful approach to international development within the current context of strategic and diplomatic interests. The values of international development do not conflict with the UK national interest, and it is disappointing that governments have not been able to argue persuasively how aid spending benefits Britain. This report aims to mount such a defence both methodically and logically, whilst paying constant attention to the relationship between national interest and valuesbased international action. A successful aid policy will not be founded on shallow populism, but rather on sound evidence and a clear-sighted view of what is morally right as well as what is in the UK’s national interest. ‘Global Britain’ cannot be forged by higher defence spending or new trade deals alone: it will also depend on the effective use of soft power. There is still time for the Government to restore aid spending, ensure the success of its newly merged department, and retain the mantle of global leadership in international development which the world needs. Lord Herbert of South Downs Chairman The Project for Modern Democracy

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Executive Summary Global Development Challenge This paper – the second of two studies in the Project for Modern Democracy’s Global Development Challenge – examines the history and traditions of the United Kingdom’s development aid policy, from the early 20th century through to the contemporary challenges of the present day. The first paper in the project assessed the academic literature on the effectiveness of aid and concluded that, on balance, aid does work in achieving its aim of alleviating poverty. This report turns to the UK experience specifically and identifies the factors and ideas that have informed the UK approach to international development. In particular, it analyses how development policy has been informed by a perceived ‘national interest’ – which at certain times has conflicted with the ‘values’ of international development – and how successive governments have sought to reconcile the two. The fluctuations in the UK’s approach to aid can be observed over the years in where responsibility for development has been placed in Whitehall. Particularly in the latter half of the 20th century, development policy moved back and forth from within the Foreign & Commonwealth Office to without. This appeared to be resolved in 1997 when the New Labour government created an independent Department for International Development, but changing international priorities and political visions throughout the 2010s precluded a departmental merger in 2020 and a planned aid budget cut in 2021. With the new Foreign, Commonwealth & Development Office set to define a new path for UK aid over the coming decade, this report puts forward recommendations for the future of UK development policy to ensure Britain continues to be a global leader in international development. Given the department now faces a constrained budget for at least the next few years, to follow a path that damages UK credibility and impedes the effectiveness of aid work would be remiss.

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The Colonial Origins of Britain’s Development Policies 1929-1964 Britain’s involvement in international development is rooted in its colonial history. Yet for much of the colonial period, Britain’s imperial policies were shaped by two principles which discouraged sending financial assistance to its colonies. These were (1) a belief in Free Trade and laissez faire economics that can be traced back to the repeal of the Corn Laws in 1846, and (2) the principle set down in the 1860s by the Prime Minister William Gladstone, whereby the British Government expected colonial administrations to be financially selfsupporting as far as possible and not to rely on resources from the Colonial Office. Over the course of the early 20th century these two principles slowly gave way to an acceptance that the British State should play a larger role in the economic development of the colonies, and by the 1960s British provision of overseas assistance existed in various forms including grants-in-aid, loans and technical co-operation, as well as multilateral engagement with the World Bank and United Nations. Although decisions in this period were taken with economic and commercial interests in mind, this coincided with an ambition to improve the standard of living in British colonies and a recognition of aid as a way to tackle poverty and improve lives. With the first Development Decade in the 1960s, there were early signs of the UK engaging with a multilateral system and a recognition that development was a long-term objective. As this approach to development matured during the decade, the new Labour government established a dedicated Cabinet voice for development as early as 1964.

The Evolution of Britain’s Development Policies 1964-1997 Harold Wilson’s Labour government, elected in 1964, established an independent Ministry of Overseas Development (ODM). This was followed by a 1965 White Paper outlining its purpose, which recognised the basis of the UK aid programme as a moral one and the value of giving aid through international organisations. The Second Development Decade began with a resolution at the United Nations in 1970 to aim to spend 0.7 per cent of Gross National Income on aid, and meeting this 0.7 per cent aid target at an unspecified future

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date became official Government policy that same year. This marked a tonal shift from the somewhat paternalistic tone of development policy during the colonial period. During the 1970s, the ODM would become the Overseas Development Administration (ODA) within the Foreign Office during the Heath government, before being spun out again by successive Labour administrations, and finally returning to Foreign Office control during the governments of Margaret Thatcher and John Major. During these Conservative administrations, aid spending as a proportion of GNI steadily fell from 0.51 per cent in 1979 to less than 0.3 per cent by 1997. Political realities meant that the ODM/ODA often fell short of its aspirations. Throughout its history a significant proportion of British bilateral aid was tied to British goods and services, thus reducing its value to recipients, and the ODM/ODA’s relatively weak position within Whitehall prevented it from standing up to stronger government departments on issues such as the Pergau Dam affair. Falling or stagnant aid spending during the 1979-1997 period constrained what the ODM/ODA could achieve in comparison to other wealthy donor nations such as the United States, Germany and Japan. Even so, Britain’s aid was reputed internationally to be of a high quality, and Britain played a leading role in the development of the multilateral system where the focus on poverty reduction continued to gain traction as a primary goal of development. Although the position of ODM/ODA was weakened as it became increasingly subordinate to the Foreign Secretary, this can be put down to a failure to give significant weight to development policies as part of a wider foreign policy strategy, with aid often used as a tool for political or commercial priorities.

The Department for International Development 1997-2020 The landslide victory of Tony Blair and New Labour in the 1997 election led to the establishment of an independent Department for International Development. The department’s first development secretary, Clare Short, passionately believed in an independent department and sought to untie development aid from national interest considerations. This led to the swift repeal of the ‘Aid for Trade’ Provision that had The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

constrained aid provision by tying it to UK trade policy, and DFID embarked on a fresh course with its mission first and foremost to alleviate poverty. It can be argued that DFID was the quintessential departmental embodiment of New Labour’s centrist policy positions, with a progressive vision grounded in practicality. Despite some year-on-year drops in aid spending, DFID was driven by the goal of reaching the 0.7 per cent target and on average the UK’s allocation of official development assistance increased considerably. By 2010, aid spending as a percentage of GNI was approaching 0.6 per cent, driven by a focus by Short and her successors to measure success by the amount of money spent. This ultimately led to allegations of waste by some critics, most prominently in the right-wing press and lobby groups, with concern that UK aid money was financing government corruption in developing countries with no oversight of where development aid was being spent and who it was benefitting. The 2010 election returned a Conservative-led Coalition government. Going into the election, the Conservatives had committed to the 0.7 per cent target and would continue to do so in subsequent elections, forging a cross-party consensus on the issue of aid spending. Short’s legacy remained largely intact at DFID under Conservative governments, though successive development secretaries would seek to address concerns of waste by pivoting to a focus on results and scrutiny – most significantly, Andrew Mitchell introduced the ‘payment-by-results’ system and launched the Independent Commission for Aid Impact, with an aim to strengthen oversight of UK aid effectiveness. The UK met the 0.7 per cent target for the first time in 2013 and in every year since, facilitated by legislation in 2015 that wrote the commitment into law. This meant that DFID was the only department to grow its budget at a time of financial austerity, which only served to intensify press scrutiny of where aid money was being spent. Mitchell’s focus on transparency and extracting value for money for British taxpayers was designed to alleviate these concerns, but events in the second half of the decade would overshadow any defence of DFID’s values and purpose. The UK’s vote to exit the European Union in 2016 cannot be understated in its impact on development policy. Seeking to carve a new path on the world stage as an actor with an independent trade policy and a new relationship with its traditional allies, the UK approach The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

to foreign policy is now guided by an overarching ‘Global Britain’ strategy. In an attempt to harmonise development policy with the strategic and diplomatic goals of Global Britain, Prime Minister Boris Johnson announced in 2020 that DFID – which had stood deliberately independent of these goals for 23 years – would be brought back under Foreign Office control.

Was DFID a success? On 2nd September 2020, the Foreign, Commonwealth and Development Office (FCDO) was formally inaugurated, bringing DFID’s 23 years as an independent development department to a close. The post of Secretary of State for International Development was abolished, meaning that for the first time since John Major’s government, there would be no dedicated voice for international development in the cabinet. The establishment of DFID marked the end point of an 80-year trend in UK development policy towards a singular focus on poverty alleviation. Whether the independent department was a success can be measured in terms of its impact on UK international leadership, soft power, stewardship of public funds, influence in Whitehall, and alignment with the national interest. DFID was an effective and efficient steward of government resources, delivering programmes in-keeping within a political paradigm that stated that poverty alleviation was in the national interest. It enhanced Britain’s soft power, though perhaps its impact was enhanced more by the size of its budget than by DFID itself, and helped shape the global development agenda, both thematically and administratively. On the other hand, its pursuit of results at the expense of everything else saw British values sacrificed for good relationships and it struggled to shape a narrative that an aid budget focused solely and exclusively on alleviating poverty was truly in the national interest. Ultimately, this last point resulted in its dissolution – the Department for International Development ceased to exist because it, and its allies, lost the argument for international development.

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Global Britain The discourse leading up to the departmental merger was primarily divided between those arguing that UK aid, having faced accusations that some projects were wasteful and/or ran counter to wider foreign policy interests, should be integrated and used more in line with British diplomatic strategies under a unified ‘Global Britain’ agenda; and those arguing that an independent DFID, respected worldwide for its transparency and its focus on addressing long-term development goals divorced from commercial interests, could command far more soft power and was more effective as a separate department with its own political leadership rather than as an agency within another. The merger carries both risks and opportunities. This report examines similar mergers from both Canada and Australia and finds that an overarching strategic vision is important to making a merged department work – which the UK has in ‘Global Britain’ – but a strong and clear commitment to it is key. Maintaining high levels of transparency around aid spending, retaining the expertise of experienced staff, fostering a common bureaucratic culture, and determined departmental leadership are all additional necessities. The FCDO is faced with the immediate priority of collaborating on an international response to the COVID-19 pandemic, but will also need to consider longer-term issues such as climate change as it consolidates its strategy. The immense economic impact of the pandemic has led to unprecedented levels of public debt, and faced with declining levels of public support for the current proportion of aid spending, the Government has signalled its intention to amend the 2015 Act and cut the aid budget to 0.5 per cent for the foreseeable future – breaking the cross-party consensus that had held for a decade. Unless or until a government is able to successfully counter the narrative that aid money is spent wastefully or that the soft power it garners is not in the national interest, there seems little prospect of a rally in public levels of support for development. As the Government continues to outline its priorities for the FCDO, this should be accompanied by a concerted effort to rebuild public support for aid spending and could be achieved through a compelling narrative around global public health in the context of the COVID-19 pandemic. The report outlines the components of such a narrative, including pandemic resilience, a focus on improving data and technology, a renewed commitment to The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

multilateralism, investment in diagnostics and surveillance, and supporting global health research and development. This report argues that it is important to note that the UK is no longer a military superpower, especially when compared to the United States and China, nor does it have as strong an impact in trade or diplomacy as it once did. The UK has, however, led the world in development both in terms of budget and political leadership through multilateralism, and commands significant soft power as a result. Surrendering that status, especially Britain’s leading status within the G7 given presidency of the group in 2021, risks undermining the claims around Global Britain. Not only is it beneficial to the recipients of British aid for the UK to embrace and consolidate its status as an aid superpower, it is in the national interest to do so.

Recommendations We are at an inflection point in UK development policy. Over the last century, the trend moved in the direction of an ever stronger focus on poverty alleviation with ever larger budgets. This trend peaked in 2013 with the achievement of the 0.7 per cent target. We are now moving into a new era, one marked by stronger budgetary pressures and a requirement that the aid budget delivers in the national interest. That budget will now be delivered by the FCDO, which, according to the lessons of other countries who have made similar mergers, may face considerable challenges. Based on research across the Global Development Challenge project, the report makes the following recommendations (articulated in full from p.132): 1. Maintain the legal commitment to spending 0.7 per cent of GNI on development aid 2. Strengthen political oversight of the ODA budget 3. Commit to a long-term strategy for development 4. Put transparency at the heart of the FCDO’s work 5. Drive a common global standard around verifying impact of aid programming 6. Champion the role of UK aid The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

7. Prioritise global public health 8. Invest in R&D to address market failures and drive a stronger vision for the provision of public goods 9. Maintain UK spending through multilaterals 10. Be an exemplary global leader and forge a bold vision for international development for the coming decades

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I: The Colonial Origins of Britain’s Development Policies 1929-1964 The foundation of the Department for International Development (DFID) by the newly elected Labour Government in 1997 signalled the start of a new era in Britain’s involvement in international development. With its own Cabinet minister, Clare Short, the newlyformed DFID was capable of influencing decisions across government. But Britain’s involvement in international development stretched back much earlier. DFID’s antecedents included the Overseas Development Administration (ODA), the Ministry of Overseas Development (ODM), the Department of Technical Co-operation (DTC) and various arms of other departments. Britain’s involvement in international development is rooted in its colonial history. Yet for much of the colonial period, Britain’s imperial policies were shaped by two principles which discouraged sending financial assistance to its colonies. The first of these, according to Ireton (2013, pp. 5-6), was a belief in Free Trade and laissez faire economics that can be traced back to the repeal of the Corn Laws in 1846. The second was the principle set down in the 1860s by the Prime Minister William Gladstone, whereby the British Government expected colonial administrations to be financially self-supporting as far as possible and not to rely on resources from the Colonial Office. Over the course of the early 20th century these two principles slowly gave way to an acceptance, reluctant at first, that the British State should play a larger role in the economic development of the colonies. Before 1929, the main form of assistance available to Britain’s colonies took the form of grants-in-aid from the Treasury. These had been introduced in 1878 and were only available to those colonies that, owing to their economic position, were unable to provide a basic level of public administration without external support. These were known as Treasurycontrolled colonies as the Treasury maintained close oversight over their individual budgets. By contrast, colonies such as Canada or India which were deemed to have ‘responsible government’, meaning a degree of self-rule, were ineligible for any form of development assistance from Britain until 1950. According to the Overseas Development Institute, ‘there The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

was no general departure from [the Gladstonian] principle, no acceptance of the idea that British taxpayers should normally and regularly contribute to colonial development, until the Colonial Development Act of 1929 and, on a larger scale, the Colonial Development and Welfare Acts of 1940 and after’ (ODI 1964, p. 6). These Acts shall be discussed in greater detail below. Britain’s first step towards government-administered financial assistance came during the 1920s and was carried out in a spirit of national self-interest rather than altruism. Britain had still not fully recovered from the First World War, and unemployment was persistently high at an average of 11.2 per cent across the decade (Denman and McDonald, p. 6). In an attempt to increase demand for British exports and thereby reduce domestic unemployment, the Government made provision in the Trade Facilities Act of 1924 for the Colonial Secretary to subsidise loans for agreed projects in Britain’s colonies which would promote employment back in Britain. The Palestine and East Africa Loans Act of 1926 likewise provided a guaranteed loan of £10 million for transport development in East Africa but stipulated that half the available money should be spent in Britain itself (Schlauß 2012, p. 43). The East Africa Commission, whose report in 1925 lay behind the Bill, had noted that ‘the indirect benefits of increased trade and production within the Empire will more than counterbalance any initial [financial] sacrifice’ (cited in Constantine 1984, p. 119). The takeup of both these schemes, however, was limited, partly owing to the strict qualifications attached to meeting them. A more significant step towards formalised development assistance came in 1929 with the introduction of the Colonial Development Act (CDA) by the newly elected Labour minority government led by Ramsay MacDonald. This Act set up a Fund, the CDF, which could provide up to £1 million a year in grants or loans to Britain’s colonies ‘for the purpose of aiding and developing agriculture and industry…and thereby promoting commerce with or industry in the United Kingdom’. The CDF would last 10 years, and schemes would have to be approved by the Colonial Development Advisory Committee. According to Barder (2005, p. 4), the Committee ‘generally felt that the Act did not permit aid for social services, for recurrent expenditure or for projects that would not result in any gains for the UK.’ CDF funds were not available to colonies deemed to have ‘responsible government’,

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meaning that ‘from the outset, colonial development assistance was to focus mainly, though not entirely, upon the West Indies and Africa’ (Ireton 2013, p. 7). Ireton writes that ‘[i]n presenting the Bill to Parliament the interests of Britain in colonial development rather than the interests of the colonies themselves was again the dominant theme’. Although CDF funds were not formally tied to British goods and services, Ireton notes that colonial administrations ‘had been made aware’ of the connection between CDF funds and the reduction of domestic unemployment, and a 1931 White Paper on public expenditure explicitly recommended that the Colonial Office should prefer those schemes which would give ‘the greatest and speediest benefit to this country’ (quoted in Constantine 1984, p. 185). By the end of the CDF in 1940, its funds had been used for almost 600 schemes. The total contribution from the CDF was £8.9 million, equivalent to £250m in 2017. 30 per cent of these funds were used for transport and communications projects, 16 per cent for public health, and 10 per cent for water supplies and water power (see Table 1). Category

Agricultural development, etc. Internal transport and communications Harbours Fisheries Forestry Surveys Land reclamation and drainage Water supplies and water power Electricity Mineral resources Scientific research, etc. Public health, etc. Miscellaneous Total

534,118 2,658,290 474,245 156,630 106,640 253,375 444,100 923,417 163,608 770,050 597,654 1,460,338 332,618 8,875,083

Per cent of Total 6 30 5 2 1 3 5 10 2 9 7 16 4 100

Table 1: Sectoral Breakdown of Projects recommended by CDAC 1929-40. Source: ODI 1964, p. 29 The significance of the CDA was more political than practical. As Dibua (2013, p. 50-1) comments, ‘the sum of £1 million a year…was too small to have a significant impact on the economy of the colonies.’ Instead, the CDA ‘can be regarded as constituting a form of

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revolution in Britain’s economic policy’ and a ‘defeat of the hitherto prevalent classical economic philosophy of laizzez faire’. Confidence in non-interventionist economics was to be shaken further during the Great Depression of the 1930s, and Britain was subsequently prepared to adopt ‘an amalgam of laissez faire and state intervention’ with regard to colonial development. As a result, the 1929 CDA ‘can be understood as a first step towards more formalised development planning’ (Schlauß 2012, p. 45).1 In the 1930s a ‘wave of social unrest’ swept across the British Empire (Barder 2005, p. 4). The West Indies, which were largely dependent on agricultural exports such as cane sugar, were hit hard by the collapse in global commodity prices following the 1929 Stock Market Crash in New York. Falling sugar prices, driven down further by the British government’s policy of subsidising domestic sugar beet production, led to even lower wages and high unemployment in the Caribbean. Matters were made even worse by a series of plant diseases and hurricanes. Living conditions on the islands were already low: by 1934, 10 per cent of infants in Trinidad died in their first year, and ‘dismal wages’ forced workers on Tobago’s coconut plantations to eat iguanas and boiled brush to survive. In 1934, protests broke out in British Honduras and Trinidad, followed in 1935 by strikes in St Kitts and Trinidad. In 1937, workers in Barbados rioted in protest at the government’s deportation of a union organiser, and the following year 46 people lost their lives in riots in Jamaica. Falling copper prices also stirred unrest in Africa’s copper belt, where reduced wages and an attempt by the Northern Rhodesian government to increase taxes within mining compounds led to a strike in 1935 in which six miners were killed (Parsons 2014, p. 93-4). Although the outbreaks of violence across the empire in the 1930s were mostly unconnected, the Colonial Office ‘concluded that it would take significant administrative reforms to ensure the long-term viability of the British Empire’ (Parsons 2014, p. 94). This would require the abandonment of the Gladstonian principle and a reluctant acceptance that the British Government could no longer expect colonial administrations to be entirely selfsufficient financially. With the CDF coming to an end in 1940, the Colonial Secretary Malcolm MacDonald convinced the Government to commit £5 million a year for schemes 1

„Der CDA aus dem Jahr 1929 kann als ein erster Schritt in Richtung einer formalisierteren Entwicklungsplanung verstanden werden.“ The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

‘likely to promote the development of the resources of any colony or the welfare of its peoples’ through the 1940 Colonial Development and Welfare (CD&W) Act. The Act also made available another £500,000 a year for research and cancelled some £11 million of the £15 million owed by the colonies to the UK (ODI 1964, p. 24). In an attempt to ‘diffuse political and economic dissent by giving subject peoples a greater stake in the economic life of the empire’ (Parsons 2014, p. 95), MacDonald also sent trade unionists to the West Indies and established departments within the Colonial Office for labour, social services, education, and public relations. George Orwell, whose experiences as a colonial policeman in Burma had made him deeply critical of Britain’s imperial policies, satirised MacDonald’s colonial experts in Whitehall as a class of ‘[w]ell-meaning, over-civilised men, in dark suits and black felt hats, with neatly-rolled umbrellas crooked over the left forearm’, engaged in ‘imposing their constipated view of life on Malaya and Nigeria, Mombassa and Mandalay’ (quoted in Parsons 2014, p. 95). Dibua (2013, p. 51) notes that ‘[t]he inclusion of the word welfare in the title of the [CD&W] Act has been hailed as marking a major departure in British colonial policy in that Britain was now committed to putting in place services that would improve the standard of living of colonial subjects.’ Adyanga (2011, p. 99) writes that ‘[t]he departure from the 1929 Act could have been considered a very transformative move…if the Act was taken seriously and implemented fully.’ However, the sudden intensification of the Second World War seriously dampened expectations of what the 1940 CD&W Act could achieve. At the Act’s Second Reading in the House of Lords, one week after the French surrender to Nazi Germany, the Colonial Secretary acknowledged that ‘much that we had hoped to do under this Bill when it became law must wait for happier times’; 2 Ireton (2013, p. 9), moreover, notes that colonial governments were advised that ‘schemes would only be considered if they were sufficiently urgent and important as to justify the use of British funds in present circumstances’. By the end of 1946 only £10.5 million had been disbursed to the colonies out of a potential total sum of £33 million (Dibua 2013, p. 52).

Hansard HL Deb 02 July 1940 vol 116 col 724 [Electronic version].

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As with the CDA, the motive behind the CD&W Act appears to have been mainly national self-interest and a desire to avoid the disturbances of the 1930s during a time of war. Dibua (2013, p. 52) asserts that the Act ‘was not actually designed to promote the welfare of colonial subjects; rather, it was meant as a form of propaganda to present the façade of something being done about improving the standard of living of the peoples in the colonies’. Adyanga (2011, p. 102) likewise argues that ‘colonial development and welfare legislation was presented misleadingly as policies to improve the welfare of Africans rather than the legislation’s true purpose, which was to channel African resources to reconstruct Britain and provide employment to Britain’s workforce.’ As the Second World War drew to a close, it was agreed that a new CD&W Act for 1945 would provide £120 million over 10 years. An annual maximum spend of £17.5 million would mean that some unspent funds could carry over from one year to the next. The annual spending ceiling was raised to £20 million by the subsequent 1949 CD&W Act, and to £25 million by the 1950 CD&W Act; this Act also increased the total funds available by £20 million for the period up until 1955/56 and allowed colonies deemed to have ‘responsible government’ to receive CD&W funds for the first time. Several further CD&W Acts extending funding were passed over the next 15 years, though ‘the annual amounts provided for did not increase substantially’. Throughout this period, grants-in-aid remained a significant part of Britain’s financial assistance to the colonies: Ireton (2013, p. 10) notes that during the Second World War grants-in-aid exceeded CD&W expenditure, and in the early 1960s, at some £13 million, ‘they represented about 40 per cent of all British government financial assistance to the colonies’.

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Figures are percentages of the total commitment for the period Type of scheme Administration and surveys Communications: Roads Other Economic: Agriculture, fisheries, forestry Electricity, power, industrial development Other Social Services: Education Health Housing and water supplies Other development schemes Research Total (per cent) Total £m Grants £m Loans £m

1946-54

1946-59

1959-62

7.1

6.7

5.4

11.3 4.3

16.9 4.6

15.4 7.4

13.9 n/a 5.4

14.1 0.5 4.4

12.5 10.3 4.1

17.8 11.3 11.6 7.0 10.3 100.0 120.2 -

19.0 9.1 11.3 5.3 8.0 100.0 204.5 202.5 2.0

21.8 5.6 6.8 5.0 5.8 100.0 298.5 287.7 10.8

Table 2: CD&W commitments – distribution by type of scheme 1946-1962. Source: ODI 1964, p.57

In October 1945, after a landslide electoral victory, the Labour Government of Clement Atlee took office. The new government took the view that the UK ‘should play a substantial role in assisting the development of the colonies’ (Barder 2005, p. 4). Each colonial government was required to produce a ‘Ten Year Plan’ for economic development ‘in consultation with representatives of the local population’. Few predicted at this stage the ‘rapid acceleration of the movements towards political independence’ that came in the 1950s (ODI 1964, p. 31). The next significant step in Britain’s involvement in colonial development came in 1948 with the Overseas Resources Development (ORD) Act. This established two statutory corporations, the short-lived Overseas Food Corporation (OFC), which was tasked with promoting the production of foodstuffs in Britain’s colonies for importation to the UK, and the Colonial Development Corporation (CDC), which was given the broader objective of promoting the economic development of the colonies (Ireton 2013, p. 10). The fate of the OFC was sealed early on by what has become arguably the most well-known development

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failure of all time, the Tanganyika Groundnut Scheme. In 1946, the United Africa Company (UAC) had persuaded the British Government to clear an area of bush in parts of Tanganyika (modern Tanzania), Northern Rhodesia (Zambia) and Nyasaland (Malawi) roughly the size of the US State of Connecticut. The idea had come to the UAC’s Managing Director, Frank Samuel, while he was in an aeroplane flying over seemingly uninhabited parts of Tanganyika. In the words of Alan Wood (1950, p. 27), he had started to wonder ‘whether this waste land could not grow oil crops, to the benefit of the margarine ration of the British housewife and the legitimate profits of the United Africa Company’. Nearly £36 million was invested in the scheme, over £1 billion in 2016 prices. The project, which was taken over by the OFC in 1948, ground to a halt only three years later in 1951. Up to 75 per cent of its tractors had been put out of action by the African heat; the clay-rich, sunbaked soil blunted ploughshares within five hours; and Major-General Harrison, the scheme’s field commander, ‘complained of “thorn bush about 15 feet high”, of a density that “must be seen to be believed”, interspersed with “enormous Baobabs, probably one of the most useless trees on the face of the earth”’ (quoted in Esselborn 2013, p. 73). In the end, more groundnuts were imported to Africa as seeds than were ever produced by the scheme, and nine-tenths of the land cleared proved so unsuitable that it was no longer cultivated by 1955. When Evelyn Waugh visited Tanganyika in 1958, he found the scheme’s original headquarters crumbling and overgrown, the train lines abandoned, and the roads beginning to break down. The publicity attracted by the scheme’s failure, coupled with its wildly over-optimistic initial promises, have contributed to a deep scepticism about large scale, centrally-organised projects that has coloured development discourse ever since. After a difficult start, the Colonial Development Corporation enjoyed greater and more lasting success than the OFC, and its successor organisation, the CDC Group, continues to play an important role in Britain’s development efforts today. The CDC was established to fill the gap between development initiatives that were not expected to generate a financial return, and which would thus need to be funded publicly, and those initiatives which would generate sufficient profits to attract private enterprise. Ireton (2013, p. 11) writes that ‘[i]n between there were certain commercial-like activities which, while being of value developmentally to the colony concerned, could not be expected to yield a financial return sufficient to attract private risk capital.’ The CDC was ‘required to operate on commercial The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

lines, having to pay its way “taking one year with another”’ (ODI 1964, p. 47); however, its only financial objective was to break even each year. Its initial capital was provided in the form of below-the-line loans from the Treasury which were repayable over periods of up to 40 years, and it could operate in any colony that was eligible for CD&W funds. The Overseas Development Institute notes that the CDC was ‘empowered to undertake a very wide range of projects’; however, it was ‘expressly forbidden by the [CD&W] Act of 1959 from providing welfare or social services like schools, colleges, hospitals, or buildings for the public service’ (ODI 1964, p. 47). In 1960, the British Prime Minister Harold Macmillan declared in a speech to the Parliament of South Africa that the ‘wind of change is blowing through this continent’. Several of Britain’s colonies had already declared independence, and many colonies in Africa were moving rapidly towards doing so. Britain’s development assistance would increasingly be towards independent members of the Commonwealth rather than colonies. In 1958, the Government had agreed to provide Commonwealth Assistance (CA) Loans under Section 3 of the 1949 Export Credit and Guarantees Act to independent members of the Commonwealth. In addition, the new CD&W Act of 1959 made available up to £100 million of Exchequer Loans to Commonwealth members. In 1963, the CDC was renamed the Commonwealth Development Corporation and was permitted to invest in most Commonwealth countries, and in 1969 it was allowed to invest outside the Commonwealth for the first time. Using figures from the Sinclair Report, which was commissioned to make recommendations on the future structure of the CDC, D. J. Morgan, and his own estimates, Ireton (2013, p. 16) presents the breakdown of Britain’s total public and private investment in the colonies between 1946 and 1955 as follows:

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Figure 1: British public and private colonial investment, 1946-1955. Grants-in-aid figure is approximate. Source: Ireton 2013, p.16 To put these figures into context, Ireton (2013, p. 17) notes that CD&W funds rarely accounted for more than 1 per cent of the GDP of recipient colonies in Africa, with the exception of Malawi. As a result, Ireton concludes that these funds ‘were not sufficient in volume terms to make a material difference to the economic and social contribution of most of the colonies’. Running alongside Britain’s relatively minor financial contributions to its colonies, an important outside influence on the development of Britain’s aid policies was the programme of Marshall Aid from the United States that had begun in 1948. Intended to help Europe recover from the devastation of the Second World War and so to discourage it from falling under Soviet influence, the Marshall Plan transferred US$12 billion to Europe between 1948 and 1952. At its highest point, Marshall Plan spending was equivalent to 2 to 3 per cent of US national income, similar to the proportion spent on the Moon Landings in the 1960s. The Marshall Plan is widely regarded as a tremendous success: in 1951, the size of each The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

recipient country’s economy significantly surpassed pre-war levels, with average output 35 per cent higher than in 1938 (Eichengreen 2008, p. 57). According to Finn Tarp (2009, p. 5), ‘[t]he impressive results achieved by the Marshall Plan fuelled highly optimistic expectations about the future effectiveness of foreign aid’. In 1948, the recipients of Marshall Plan funds formed the Organisation for European Economic Co-operation (OEEC). In 1961, this became the Organisation for Economic Co-operation and Development (OECD), containing within it the Development Assistance Committee (DAC) that is still responsible for defining and collecting data on official development assistance (ODA), the most important component of modern foreign aid (Barder 2005, p. 5). The years immediately following the end of the Second World War also saw the establishment of the network of multilateral organisations that continue to play an important role in the international development landscape. The International Bank for Reconstruction and Development (IBRD), one of the five institutions that make up the World Bank Group, had been established at the Bretton Woods Conference in 1944, and shortly afterwards the UN established technical assistance programmes and Specialized Agencies such as the UN Education, Scientific and Cultural Organization (UNESCO) and the World Health Organization (WHO) (Ireton 2013, p. 19). In 1960, Britain supported a UN General Assembly resolution calling for total public and private resources flows from industrialised to developing countries to increase to at least one per cent of GNP. Britain’s contributions to international development would subsequently take place in a very different international landscape in which Britain was just one of many nations and organisations delivering assistance, in many different forms and quantities, to developing countries. 1957 White Paper Against this changing landscape in international development, ‘a more coherent aid policy was beginning to develop within the UK’ (Barder 2005, p. 6). As Britain’s colonies began to achieve independence in the 1950s, it was initially the policy of Harold Macmillan’s Conservative Government that Britain’s financial assistance would cease on independence. In 1957, the Commonwealth Relations Office (CRO) produced a White Paper which

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addressed the ‘special problems arising from the achievement of independence by Colonial territories’: Because of the political and economic ties which bind the Commonwealth countries together, Her Majesty’s Government retains the closest interest in their well-being and economic development. But the special responsibility which Her Majesty’s Government has for Colonial dependencies ceases when they achieve independence. The Government therefore does not envisage Government to Government loans as a normal means of assisting such countries. […] (para. 16) A similar policy was applied to investments made by the Colonial Development Corporation: although the CDC would be allowed to continue with any existing projects, the White Paper stated that the CDC ‘should not invest money in new schemes in any territory after independence’, since the Corporation’s ‘essential purpose is the fulfilment of the United Kingdom’s special responsibility towards its own dependent territories’ (para. 31). An exception was made for technical assistance: under a scheme announced on 2nd April, 1957, public servants from Ghana were to be trained in ‘technical and practical subjects’ at the Government’s expense, and the White Paper stated that the Government was prepared to make similar arrangements for other newly-independent Commonwealth countries (para. 46). The CDC would also be allowed to offer its managerial experience to newly-independent Commonwealth countries in undertaking projects, but it could not commit its own funds (para. 32). The 1957 White Paper also emphasised that private investment was more important than aid for development, arguing that the interests of newly independent Commonwealth countries ‘can better be served if they build up their own credit and thus make use of the facilities for raising money on the London market or elsewhere’ (para. 16). 1960 White Paper Harold MacMillan’s administration produced two further White Papers on overseas development in 1960 and 1963. Taken together with the 1957 paper they document a

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gradual acceptance by the British Government of the need for ongoing development assistance to developing countries. The 1960 paper, prepared by the Treasury, ‘contrasts sharply with the 1957 paper’ (ODI 1964, p. 60) and deals ‘almost entirely with Government assistance’ (ODI 1964, pp. 60-61). While the 1957 White Paper had begun by stating that the ‘strength of sterling and the successful development of the United Kingdom’s own economy’ was of paramount importance if the United Kingdom were ‘to play an effective part in the provision of resources for investment in the Commonwealth’ (para. 3.i), the 1960 White Paper began by quoting the following passage from the Queen’s speech of 27th October, 1959: The improvement of conditions of life in the less-developed countries of the world will remain an urgent concern of my Government. They will promote economic co-operation between the nations and support plans for financial and technical assistance. It went on to acknowledge, in an apparent reversal of the views expressed in the 1957 White Paper, that ‘many of the poorer countries cannot under present conditions attract all the private capital they need’ (para. 3). This point had first been recognised at the Commonwealth Economic Conference in 1958, at which the United Kingdom had announced that it would provide CA loans to newly independent Commonwealth countries. These would be made under Section 3 of the 1949 Export Guarantees Act, as amended by the Export Guarantees Act of 1957. 1960 was the start of the UN’s first ‘Development Decade’, and in an indication of the growing importance of the multilateral system during this period. The 1960 White Paper also stated the United Kingdom’s support for the work of the IBRD and for the formation of the International Development Association (IDA); today, these are the two component institutions of the World Bank.3 In the early 1960s, the United States still provided ‘well over half’ of all official aid to developing countries (HM Treasury 1963, para. 10). In 1959, 3

Not to be confused with the larger World Bank Group, which today comprises the International Bank for Reconstruction and Development (1944), the International Finance Corporation (1956), the International Development Association (1960), the International Centre for Settlement of Investment Disputes (1965), and the Multilateral Investment Guarantee Agency (1988). The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

France was spending 2.3 per cent of its gross national product (GNP) on development assistance, mostly to its colonies and overseas regions (Bossuat 2003, p. 440). Britain, in comparison, spent 0.56 per cent of its GNP on Official Development Assistance (ODA) in 1960.4 1963 White Paper The 1963 White Paper was more forward-looking and optimistic than both its predecessors. From the outset, it recognised that there was a strong moral case for providing aid to developing countries: During the last three years [since the 1960 White Paper] the need for aid has become no less. The difference between the standards of living in the industrialised and in the developing nations has not diminished—on the contrary it has increased. Over a large part of the world poverty and malnutrition still persist; disease and illiteracy are still widespread; and the increase in population exerts a remorseless pressure on resources. (paras 2-3) The 1963 paper indicated the British Government’s growing awareness of the need for continuing financial and technical assistance to former colonies after independence, while emphasising that existing colonies would remain the priority: The first call on our resources must be for those territories for which we still have a direct responsibility, but we are fully aware of the problems of the independent countries for which we were formerly responsible, and we are determined to assist them so far as we can. […] (para. 68)

It should be noted that not all of France’s expenditure on development assistance in 1959 would fall under the definition of ODA as defined by the OECD; however, France’s ODA expenditure in 1960 was still significantly higher than Britain’s at 1.34 per cent of GNP, before falling rapidly over the following decade.

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It has not in the past been the practice to provide assistance from United Kingdom funds towards the recurrent budget of an independent Commonwealth territory. But it is not always possible for a territory to enter independence with a fully balanced budget and, exceptionally, budgetary aid has been given. (para. 69) The paper also noted that the UK’s aid to foreign, i.e. non-Commonwealth, countries had risen from £10.3 million in 1957-58 to £15 million in 1962-63. This included projects such as the construction of the desert road from Amman to Ma’an in Jordan and loans amounting to a total of £3.9 million to Chile, the Cameroon Republic, Algeria, Senegal, Syria, Afghanistan, Vietnam and Korea. During this period, a proportion of Britain’s aid budget was tied to British goods and services, but the paper stated that ‘we are prepared to take part in any genuine international move towards the untying of aid’ (para. 37). No mention was made of any timetable for untying British aid. Significantly, the 1963 paper also recognised that development could not be achieved overnight and that international provision of aid would continue for the foreseeable future: [A]lthough the era of aid, viewed in the perspective of history, may be a transitory one it does not follow that it will be short, still less that its end is in sight. (para. 6) This comment can be seen as a first step towards Britain’s long-term commitment to international development. The 1963 White Paper also drew a direct link between Britain’s involvement with international development and its colonial history, stating that ‘[o]ur long experience in fostering the development of dependent territories enables us to make a special contribution to this work’. It should be remembered that Britain’s involvement in colonial development was very limited, with development assistance rarely exceeding one per cent of recipient colonies’ revenues. Nevertheless, the relationships and expertise built up by Colonial Office officials, many of whom later transferred into the Ministry of Overseas Development (ODM), may have influenced the subsequent development of Britain’s aid policies. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

The 1957, 1960 and 1963 White Papers reveal a steady evolution in the British Government’s development policies in the years leading up to the foundation of the ODM. Although it was Harold Wilson’s Labour administration that founded the ODM, some of the policy groundwork for Britain’s long-term commitment to international development had already been laid. Arguably more significant were the developments on the international stage: the UN’s declaration of the Decade of Development in 1960 and the foundation of the OECD’s Development Assistance Committee (DAC) in the same year highlighted the need for aid on an international scale and may have contributed to the broadening of Britain’s development focus from the Commonwealth to the world at large. Establishment of the Ministry of Overseas Development By the end of the 1950s, Britain’s overseas aid was fragmented across several government departments. CD&W funds and grants-in-aid to the colonies were the responsibility of the Colonial Office; CA loans and technical co-operation to the Commonwealth was the responsibility of the Commonwealth Relations Office; and technical co-operation to foreign countries was handled by the Foreign Office. At the multilateral level, Britain’s relationship with the World Bank was the responsibility of the Treasury, and its contributions to the UN were funded by the Foreign Office, or, in the case of the UN’s Specialized Agencies, the relevant home department (Ireton 2013, pp. 28-29). To bring some of these disparate functions together ‘under one roof’, the Conservative Government established the Department of Technical Co-operation in 1961. Many of its early staff were taken from the Colonial Office, which was reducing in size as a result of rapid decolonisation. The notion of having a single department responsible for all overseas aid continued to gain traction, however. The 1964 Labour manifesto, entitled The New Britain, contained the following promise: Labour will create a Ministry of Overseas Development to be responsible not only for our part in Commonwealth development but also for our work in and through the specialist agencies of the United Nations. This new Ministry will help and encourage voluntary action through those organisations that have played such an inspired part in the Freedom from Hunger campaign. We must The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

match their enterprise with Government action to give new hope in the current United Nations Development Decade. In the General Election of October that year, the Labour Party, led by Harold Wilson, won a narrow majority, and the Ministry of Overseas Development was duly established. The ODM brought ‘under one roof’ the functions of the Department of Technical Co-operation and the overseas aid policy functions of the Foreign Office, the Commonwealth Relations Office, and the Colonial Office. The ODM also contained from the outset a planning staff of economists ‘at a time when economists were rare within Government’ (Barder 2005, p. 7). The first three Ministers of Overseas Development – Barbara Castle (October 1964December 1965), Anthony Greenwood (December 1965-August 1966), and Arthur Bottomley (August 1966-1967) – were members of the Cabinet, giving the new department an independent voice at the heart of Government. Two years later in 1966, the Colonial Office merged with the Commonwealth Relations Office to form the Commonwealth Office, and in 1968 this merged with the Foreign Office to form the Foreign & Commonwealth Office. Britain thus entered the next phase of its involvement in international development with a dedicated department, strong ties to many of its former colonies through the Commonwealth, and membership of several international organisations which were beginning to shape the new era of official development assistance on a global scale. Laying the foundations of the UK approach to development This section has identified an early UK approach to the provision of foreign aid that has informed several aspects of its international development tradition that continue to be a focus today. Although decisions in this period were taken with economic and commercial interests in mind, this coincided with an ambition to improve the standard of living in British colonies and a recognition of aid as a way to tackle poverty and improve lives. With the first Development Decade in the 1960s, there were early signs of the UK engaging with a multilateral system and a recognition that development was a long-term objective. As this approach to development matured during the decade, the new Labour government established a dedicated Cabinet voice for development as early as 1964. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

The next section of this report follows the continued evolution of these development policies and values as successive governments sought to determine where best to situate them within the UK’s wider strategic and international interests.

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II: The Evolution of Britain’s Development Policies 1964-1997 Ministry of Overseas Development 1964-1970 The foundation of the Ministry for Overseas Development (ODM) by Harold Wilson’s newly elected Labour Government in 1964 was a turning point in Britain’s involvement in international development. As discussed in the previous section, Britain’s development efforts had hitherto been limited to providing relatively small levels of financial assistance to its colonies, motivated chiefly by a desire to promote British exports and thereby reduce domestic unemployment. An early glimpse of what the ODM’s priorities would be came in a newspaper article written by Wilson before the election in which he promised that Britain ‘shall be engaged not in a tip-and-run raid on world poverty but an all out war’.5 The Fabian Society, writing in early 1964, emphasised that, in the words of Ireton (2013, p. 31), ‘[t]he ministry should not be about aid but about development, independent of foreign policy, or trade or the economy.’ The objectives of the ODM were clarified in August 1965 with the publication of its first White Paper, The Work of the New Ministry. This began by stating that ‘[t]he objective of the British aid programme is to help developing countries in their efforts to raise living standards…and therefore promote economic and social development’. The basis of the aid programme, it argued, is ‘a moral one’, and although ‘[t]he provision of aid is to our long term advantage…[this] must be secondary to the primary purpose of aid’. The ODM would increase its contributions to international organisations ‘as the needs of these organisations grow and as our own resources permit’, and it intended ‘to give the highest priority to technical assistance… [which] is often a prerequisite for enabling a country to make good use of financial aid.’ In allocating financial aid, which would remain ‘the largest part of our programme’, the ODM would give preference ‘so far as possible to those countries and regions where it will have the greatest effect on development in the long run’ (paras 1-9). The 1965 paper confirmed the responsibility of the ODM for almost all Britain’s bilateral 5

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and multilateral aid. It also recognised the ‘distinctive contribution’ made by the CDC’s investments in developing countries and waived interest on new Exchequer Advances to the CDC for certain projects ‘during the period when an investment is fructifying’ in order to increase the variety of projects the CDC could undertake (paras 109-10). According to Barder (2005, p. 7), the ODM ‘did not live up to the high expectations that had been created’. The proportion of Britain’s national income spent on aid steadily declined during Labour’s term in office, from 0.53 per cent of GNI in 1964 to 0.39 per cent in 1970, and in August 1967 the office of Minister of Overseas Development was demoted from the Cabinet, greatly reducing the ODM’s influence within Government. Barder (2005, p. 7) argues that, as a result, ‘[t]he ODM was always an aid ministry rather than a development ministry – it did not have any impact on trade policy or political relationships with overseas governments, and even on aid the most important decisions were taken by an interdepartmental committee.’ Ministry of Overseas Development 1970-1974 In October 1970, the UN General Assembly adopted a resolution declaring that the 1970s would be the Second Development Decade. Emphasis would be given to promoting sustained economic growth of at least 6 per cent across all developing countries, a higher standard of living, and narrowing the gap between the developed and developing countries. Primary responsibility for development would rest with the developing countries themselves, but the Resolution recognised that increased financial assistance and more favourable economic policies from developed countries would also be necessary. It therefore called upon rich countries to commit a minimum of 1 per cent of their Gross National Product (GNP) to development. Following the recommendation of the World Bank’s Pearson Commission in 1969, the Resolution stated that at least 7/10ths of this figure should be provided by donor countries’ official sectors, with the private sector providing the remainder. A few months earlier, in the General Election of June 1970, the Conservatives returned to government under the leadership of Edward Heath. Both parties’ manifestos had contained commitments to spend 0.7 or 0.75 per cent of GNP on aid: the slightly higher figure had The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

been the recommendation of the United Nations Conference on Trade and Development (UNCTAD), but this was dropped a couple of weeks before the General Assembly in favour of the Pearson Commission’s 0.7 per cent figure (DAC 2016a, p. 2). The Labour manifesto was highly specific: Labour will seek to devote 1 per cent of our Gross National Product to aid the developing world by 1975 and to achieve an official flow of aid of 0.7 per cent of GNP during the Second Development Decade - this accepts the target set by the Pearson Commission. The Conservative Manifesto was vaguer about when aid would increase, though it referred to the slightly higher aid target: Britain must play a proper part in dealing with world poverty…We have accepted the UNCTAD target for aid to developing countries, and will increase the British programme as national prosperity returns. We will re-examine the objectives and performance of the programme so that the maximum mutual advantage is gained. On taking office, Heath’s Conservative Government incorporated the ODM into the Foreign & Commonwealth Office (FCO) and renamed it the Overseas Development Administration (ODA).6 Although the ODA was now ultimately accountable to the Foreign Secretary, its day-to-day activities were managed by a dedicated Minister of State, the Minister for Overseas Development at the Foreign & Commonwealth Office.7 For the duration of Heath’s Government (1970-1974), the Minister for Overseas Development at the Foreign & Commonwealth Office was Richard Wood. Ireton (2013, p. 61) argues that, in practice, fears that the ODA would be used as an instrument of Britain’s foreign policy ‘proved largely unfounded’: although ‘[c]ertain important issues were referred to the

The Foreign Office had been merged with the Commonwealth Relations Office in 1968 to create the Foreign and Commonwealth Office (FCO) that still exists today. 7 A Minister of State sits on the middle rung of the ministerial ladder, below Ministers who hold Cabinet rank and above Parliamentary Under-Secretaries of State. Cabinet Ministers in charge of Departments are usually, though not always, given the title ‘Secretary of State’. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Foreign Secretary…for the most part aid decisions were made by the aid minister.’8 Nevertheless, this was clearly a demotion of the ODM within Government, and Ireton notes that staff morale ‘plummeted’ after the ODM’s incorporation into the FCO. Moreover, it is noteworthy that no new White Papers on Britain’s development policies were produced by Heath’s Conservative Government. Ministry of Overseas Development 1974-1979 The General Election of February 1974 resulted in a hung Parliament, with the Labour Party winning marginally more seats than the Conservatives despite receiving a slightly lower share of the popular vote. The Conservative manifesto had made no mention of aid or international development; by contrast, the Labour manifesto contained a commitment to move ‘as fast as possible’ towards the UN’s 0.7 per cent aid target and stated that ‘[w]e shall direct our aid towards the poorest countries and to the poorest people and give emphasis to rural development.’ Ireton (2013, p. 40) notes that this commitment to meeting the 0.7 per cent target at some unspecified point was weaker than the 1970 Labour manifesto commitment to meet it during the decade. On returning to office, a minority Labour Government led by Harold Wilson re-established the Ministry of Overseas Development as a separate department, though its first minister, Judith Hart, did not become a member of the Cabinet. After a snap election in October the same year, the Labour Party gained a narrow majority of three seats. In June 1975, Judith Hart was subordinated to the FCO. At the same time, responsibility for the ODM was formally transferred to the Foreign Secretary, who took on the additional title of Minister of Overseas Development; however, the ODM remained a separate department with its own staff and budget. Day-to-day responsibility for the ODM was given to a junior Foreign Office Minister, who took on the courtesy title of Minister for Overseas Development. The first Minister for Overseas Development was Reginald Prentice, who was already a member of the Cabinet and so retained his Cabinet seat until his resignation in 1976. Prentice’s

Ireton (2013) discusses the issue of the ODM/ODA’s status as a department in detail on pp. 60-66.

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successors, Frank Judd and a returning Judith Hart, were not members of the Cabinet, and the Foreign Secretary represented the ODM in Cabinet meetings on their behalf.9 In October 1975, the Government fleshed out its manifesto commitments on international development with a new White Paper entitled The Changing Emphasis of Britain’s Aid Policies: More Help for the Poorest. This was the third White Paper in the history of the ODM/ODA and was therefore a significant milestone in the evolution of Britain’s development policies.10 The three ‘legs’ of the Government’s new aid strategy were: (a) to give an increasing emphasis in our bilateral aid towards the poorest countries, especially those in this group most seriously affected by the rise in the price of oil and other commodities; (b) to give a special emphasis to programmes oriented towards the poorest groups within these countries, and especially to rural development; and (c) to promote situations in which British concessional aid funds can best serve to stimulate matching contributions from other governments, and to encourage the deployment of such aid through both multilateral and bilateral channels towards the poorest countries. (p. 50) Barder (2005, p. 8) comments that ‘[t]hough the White Paper played down the extent of the change that this entailed, this was a genuinely new focus on poverty.’ This reflected changes in development thinking that were happening internationally. Ireton (2013, p. 41) identifies three factors that contributed to this new focus on poverty reduction as development’s primary objective. First, while the economies of middle income countries had grown over the previous decade at an average annual rate of 6 per cent, the lowest income countries had grown at only 4 per cent, and population growth meant that incomes per capita had barely risen. Second, the 1973 oil embargo led by the Organisation of Arab Petroleum Exporting Countries (OAPEC) had resulted in a price shock that had severe

See Barder (2005), note 22. The first was the White Paper of August 1965 (Cmnd. 2736) entitled Overseas Development: The Work of the New Ministry. The second, Overseas Development: The Work in Hand (Cmnd. 3180), was published in January 1967; this was largely a progress report and a description of the existing British aid programme. 10

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implications for oil-importing developing countries. Third, in September 1973 Robert McNamara, then the President of the World Bank, had made an influential speech in Nairobi in which he highlighted ‘the need to design development strategies that would bring greater benefits to the poorest groups in the developing countries’.11 Yet despite this new focus on poverty the evolution of Britain’s aid program under the ODM ‘did not live up to the policy aspirations set out in the White Paper’ (Barder 2005, p. 8). This was partly because it did not lift the constraint prohibiting UK aid from being used for meeting local costs: as a result, ‘[a]id projects often had to be selected not for their development benefits, but because they could be designed in such a way as to have a high proportion of UK content.’ This problem was not solved until the abolition of exchange controls in 1979. In 1977 the Labour Government introduced what would become one of the most controversial elements of the British aid programme, the Aid and Trade Provision (ATP). This allowed the Government to link the provision of aid to non-concessionary export credits.12 In other words, aid could be used to soften the terms of loans to developing countries on the condition that the funds received would be spent on the purchase of British goods and services. According to Ireton (2013, p. 191), the introduction of ATP was a response to what the Department of Trade and Industry saw as an ‘aggressive use of aid’ by other donor countries such as France and Japan to promote their own exports. Barder (2005, p. 9) also suggests that it was an attempt by the Government to ‘shore up its difficult relations with UK business’. Initially, the amount of the bilateral aid budget that could be used for ATP was capped at 5 per cent, but by 1991/2 ATP accounted for almost 10 per cent of the UK’s bilateral aid spending (Ireton 2013, p. 202). The most notorious use of ATP, in what became known as the Pergau Dam Affair, took place towards the end of Margaret Thatcher’s time in office and shall be discussed further below. ATP was eventually abolished after the foundation of DFID in 1997 at the insistence of DFID’s first Secretary of State, Clare Short.

Electronic version. Export credits are defined by the OECD as ‘government financial support, direct financing, guarantees, insurance or interest rate support provided to foreign buyers to assist in the financing of the purchase of goods from national exporters’ [Source]. The UK’s Export Credits Guarantee Department (ECGD), which operates under the name UK Export finance, states that its mission is ‘to ensure that no viable UK export fails for lack of finance or insurance, while operating at no net cost to the taxpayer’ [Source]. 12

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Conservative Government 1979-1997 According to John Mitchell (1991, p. 146), ‘[f]ew things so quickly symbolised Mrs Thatcher’s victory in the 1979 general election as the changes that were soon made to government overseas development policy and spending.’ Margaret Thatcher’s view of aid was strongly influenced by the economist Peter Bauer, who argued that aid held back developing countries by creating market distortions and undermining the incentives for growth. Under the previous Labour administration, the aid budget had grown at an average of 6 per cent per annum in real terms, and by 1979 aid spending was equivalent to 0.52 per cent of GNP. After the Conservative victory, Mitchell notes, ‘[a]id went from being the fastest-growing area of public expenditure to one of the fastest shrinking.’ Aid fell to 0.35 per cent of GNP in 1980 and continued to fall over the next decade, reaching an unprecedented low of 0.27 per cent in 1990. In 1979, Britain came second in the ‘league table’ of the seven largest market economies in terms of percentage aid-giving; ten years later, it had fallen to second-last place.

Figure 2: UK development assistance spending as a percentage of GNP, 1979-1997.

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Changes in the quantity of aid were accompanied by a shift in development policy. Although no new White Papers on development were produced by the Conservative Government between 1979 and 1997, the first Minister for Overseas Development under Thatcher, Neil Marten, told Parliament in February 1980 that the Government would ‘give greater weight in the allocation of [its] aid to political, industrial and commercial considerations alongside [its] basic developmental objectives’.13 The share of Britain’s bilateral aid budget given to ATP, which since 1977 had been capped at 5 per cent, would be increased to maintain its value in real terms, and the Government would ‘look critically at [its] expenditure on multilateral aid programmes’. Ireton (2013, p. 46) comments that although this was ‘undoubtedly an important political statement’, NGOs and other aid advocates attributed it greater significance than it was due, since ‘[p]olitical and commercial considerations had always been important’. Despite the Government’s anti-multilateral rhetoric, the difficulty of renegotiating multilateral commitments meant that most cuts to aid spending fell on the bilateral portion of the aid budget. In consequence, multilateral spending actually rose as a proportion of aid spending during the Conservatives’ time in office (Barder 2005, p. 10). The changing status of development within Whitehall was also reflected by the decision to transfer the ODM back into the Foreign & Commonwealth Office, where it again became the Overseas Development Administration (ODA). This restructuring was of more symbolic than practical significance as the ODM had already been the responsibility of the Foreign Secretary since 1975; moreover, the ODA continued to have its own Minister of State within the Foreign Office and a separate administration headed by a permanent secretary. Ireton (2013, p. 61) notes that ‘[t]hroughout much of the Thatcher government and beyond it became standard practice for a member of [the ODA] to be part of the Foreign Secretary’s Private Office’, suggesting that it had at least some influence on Britain’s foreign policy decisions. Nevertheless, the weakness of the ODA’s position would later be revealed by its failure to prevent the disastrous decision to fund the Pergau Dam project. The proportion of aid that was tied to the provision of British goods and services fell towards the end of the Conservatives’ time in office, from nearly half the aid programme 13

HC Deb 20 February 1980 vol 979 cc464-65

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during the 1980s to only 15 per cent of bilateral aid in 1996. This is likely to have made British aid more cost effective, as tying aid is typically considered to increase its costs to recipients by 20 to 30 per cent (see Jepma 1991). Barder (2005, p. 10) identifies two reasons for the gradual reduction in the proportion of aid that was tied: the abolition of exchange controls in 1979, and the view of the Chancellor of the Exchequer, Nigel Lawson, that a current account deficit is not a cause for concern so long as it is the result of private savings and investment decisions.14 According to the so-called ‘Lawson Doctrine’, also known as the Pitchford Thesis after the Australian economist John Pitchford, individual private transactions are made for sound economic reasons, and therefore their aggregate effect must also be sound even if they result in a current account deficit. The Lawson Doctrine freed the Government from worrying about its balance of trade, thus reducing the need to use aid funds to promote British exports. The Pergau Dam Affair, 1993-1994 The greatest challenge to the practice of linking of aid to exports, and one of the most influential crises in the evolution of British development policy, came from the Pergau Dam Affair, which lasted from Autumn 1993 to late 1994. This was the controversy that surrounded the decision to provide £234 million of aid for the construction of a dam and hydroelectric power station on the Pergau River in northern Malaysia. This was at the time the most expensive, and arguably the most controversial, project ever funded by British aid. Unlike the Tanganyika Groundnut Scheme described in Section I, the Pergau Dam project achieved its objective, which was to generate electricity for Malaysian consumers. Although it was costlier to build than expected, the Dam continues to provide 520 million kWh of electricity a year to the Malaysian National Grid. The extensive criticism of the project both in the media and in Parliament was for two reasons that concerned the decision to fund it with British aid. First, economists at the ODA had strongly advised against funding

A current account deficit occurs when the value of the goods and services that a country imports exceed that of the goods and services it exports. A country running a current account deficit is thus a net borrower from the rest of the world, while a country running a current account surplus is a net lender to the rest of the world. Countries running chronic current account deficits can be vulnerable to heightened scrutiny from investors in times of economic uncertainty. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

the Dam because, they argued, the electricity could be generated far more cost-effectively by using gas turbine power stations. Sir Tim Lankester, then the permanent secretary at the ODA, wrote in his 2013 book on the Pergau Dam Affair that ‘[t]he economic case against the project was so overwhelming that I took the unusual step of advising ministers that, if they were to overrule official advice and approve the financing [of the project], as Accounting Officer I would require a formal direction before authorising the expenditure.’15 Since the ODA’s economists did not believe the dam would be in the best interests of Malaysian consumers, Sir Tim Lankester informed the Minister for Overseas Development in February 1991 that funding the project ‘would not be consistent with policy statements by ministers to Parliament about the basic objectives of the aid programme’ (Barder 2005, p. 31). The decision to fund the project was finally made by the Foreign Secretary, Douglas Hurd, and the objections of the ODA were overruled. Second, and most controversially, it subsequently became apparent – through evidence given by Sir Tim Lankester to a House of Commons Public Accounts Committee inquiry in January 1994 – that the provision of aid had in fact been a ‘sweetener’ for a £1 billion arms deal between Britain and Malaysia. In March 1988, the then Defence Secretary, Sir George Younger, had signed a ‘Defence Export Protocol’ under which the UK would provide Malaysia with aid worth 20 per cent of the value of the arms sales. This agreement appeared to have been rescinded in a letter on 28th June 1988 informing the Malaysian Government that there could be no ‘linking of aid to projects’; however, on the same day, the British High Commissioner in Kuala Lumpur had written another letter to the Malaysian Finance Minister in which he offered up to £200 million in aid, equivalent to 20 per cent of the value of the arms deal (Barder 2005, p. 32). This offer was eventually formalised as a loan of £234 million to fund the Pergau Dam, payable over 14 years at an extremely low rate of interest.

As Accounting Officers for their departments, Permanent Secretaries may require a written ‘direction to proceed’ from their Minister if they believe a spending decision may go against one of the four tests of value for money, regularity, propriety, or feasibility. This mechanism, which is seldom used, absolves the Permanent Secretary of accountability for the decision, and the matter is automatically drawn to the attention of the National Audit Office (NAO). It was the NAO’s report in Autumn 1993 that triggered the media interest in the decision to fund the Pergau Dam. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

The final episode in the saga came in November 1994, when the High Court ruled that the Foreign Secretary had acted unlawfully in committing aid funds for the construction of the Pergau Dam in Malaysia.16 The High Court argued that if the Pergau project was not of economic or humanitarian benefit to the Malaysian people, as the ODA’s economists believed, then the Foreign Secretary could not legally commit aid resources for this purpose. The Government accepted the High Court’s decision, but it did not reimburse the ODA’s budget for the £24.37 million that had already been spent, unlawfully, on the Dam. The revelation of aid’s ‘entanglement’ with arms sales was a serious embarrassment to the Government and in the short term damaged the reputation of British aid both domestically and internationally. Nevertheless, its legacy on Britain’s aid policies and institutions over the longer term was more positive. Rita Perakis (2012) writes that ‘Pergau Dam was a good example of how policies and institutions can improve from failure.’ First, it reinforced the case for an independent development department. As Sir Tim Lankester argued in 2012, the affair had been the result of ‘conflicting policy agendas in Whitehall, and the inability of a professionally strong, but politically weak, aid ministry to defend its corner’.17 The decision to establish a fully independent Department for International Development (DFID) in 1997, led by its own Cabinet minister, thus owes something to the Pergau Dam Affair. Second, the High Court ruling that aid funds could not be used for primarily commercial purposes invigorated the debate on the purpose of aid and drew attention to the fact that tying aid to commercial objectives reduces its developmental impact. When DFID was founded three years later, it untied all aid and published a new White Paper, Eliminating World Poverty: A Challenge for the 21st Century, in which it committed to refocusing Britain’s international development efforts ‘on the elimination of poverty and encouragement of economic growth which benefits the poor’ (1997, p. 6). Third, the lack of transparency surrounding the decision to fund the Pergau Dam, which ‘made it impossible for Parliament and the media and the development NGOs to provide any serious challenge’, may have contributed to the significant improvements in this area over the following decades.

Between 2013 and

Specifically, the High Court ruled that the Foreign Secretary had acted ultra vires, meaning beyond the scope of his powers, as defined by the Overseas Development and Co-operation Act 1980. 17 IFG Talk (2012) [Source], 5.19-31 18 IFG Talk (2012) [Source], 5.37-45 The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

2020, DFID was consistently ranked one of the most transparent donor agencies in the world by the independent Aid Transparency Index.

Towards an independent aid department On paper, the Ministry for Overseas Development and the Department for International Development were founded with similar objectives and principles. The 1965 White Paper outlining the purpose of the new ODM states that ‘[t]he objective of the British aid programme is to help developing countries in their efforts to raise living standards’ and that ‘[t]he basis of the aid programme is therefore a moral one’, and it recognises ‘the value of giving aid through international organisations’. DFID’s inaugural 1997 White Paper likewise makes eliminating poverty the main priority of Britain’s aid, speaks of a ‘moral duty to reach out to the poor and needy’, and emphasises the importance of working closely with other donors and development agencies. Meeting the UN’s 0.7 per cent aid target at an unspecified future date became official Government policy in 1970, and DFID’s 1997 White Paper ‘reaffirms’ this commitment, though this target was not in fact met until 2013. The language of co-operation and moral responsibility used by both DFID and the ODM contrasts with the somewhat paternalistic tone of the White Papers on development dating from the colonial period. Yet political realities meant that the ODM/ODA often fell short of its lofty aspirations. Throughout its history a significant proportion of British bilateral aid was tied to British goods and services, thus reducing its value to recipients, and the ODM/ODA’s relatively weak position within Whitehall prevented it from standing up to stronger government departments on issues such as the Pergau Dam. Falling or stagnant aid spending during the 1979-1997 period constrained what the ODM/ODA could achieve in comparison to other wealthy donor nations such as the United States, Germany and Japan. Even so, Britain’s aid was reputed internationally to be of a high quality, and Britain played a leading role in the development of the multilateral system where the focus on poverty reduction continued to gain traction as a primary goal of development. Although the The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

position of ODM/ODA was weakened as it became increasingly subordinate to the Foreign Secretary, this can be put down to a failure to give significant weight to development policies as part of a wider foreign policy strategy, with aid often used as a tool for political or commercial priorities. Unlike the mergers of this period, the establishment of the Foreign, Commonwealth & Development Office aims to give equal weight to international development as part of the Government’s Global Britain strategy. Section III shall follow the evolution of Britain’s development policies under New Labour and beyond as they took shape within the modern Department for International Development (DFID).

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III: The Department for International Development 1997-2020 Policy context The 1980s and 1990s were a time of changing thinking on development. From a political perspective, the end of the Cold War meant that Western governments felt less pressure to use aid for security and geopolitical purposes. Initially, this meant a significant fall in the overall quantity of aid given. The total amount of official development assistance (ODA) fell from US$ 80.4 billion in 1992 to 62 billion in 1997, its lowest level since 1981. Changes in economic thinking also hastened the decline of tying aid to security and geopolitical purposes. As outlined in Section II, declining political concern about the balance of payments deficit weakened the case for using aid to promote exports and paved the way for the abolition of the ATP in 1997 (Ilott et al. 2016, p. 24). Instead of deploying aid spending in line with hard security concerns, donor governments began to place a greater onus on promoting and encouraging objectives such as ‘good governance.’ Development thinking context – 1980s and 1990s The 1980s saw the emergence of a ‘new consensus’ on development policy internationally, as non-governmental organisations (NGOs) and academics increasingly called for a renewed focus on poverty reduction as the primary objective of development (Barder 2005, p. 12). In 1980, an independent commission on international development chaired by Willy Brandt, the former West German Chancellor, published a report (North-South: A Programme for Survival) which argued for a large transfer of resources from the ‘Global North’ to the ‘Global South’. Although it was initially expected that it would attract only a small specialist readership, the Brandt Report attracted very considerable public interest, particularly in Britain, where it sold more than 150,000 copies and became ‘one of the most surprising best-sellers of the decade’ (Bose and Burnell 1991, p. 148). The UK Government’s official response, which took the form of a memorandum from the Foreign Affairs Committee to the House of Commons, was perceived as complacent and ‘fuelled an even greater wave of The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

concern in the country at large.’ This led to a mass lobby of Parliament on 5th May 1981, the largest on any issue for more than a decade. Concerned about the decline in Britain’s aid programme, in 1981 a group of aid specialists drawn from academia and aid organisations formed the Independent Group on British Aid (IGBA) and published a report (Real Aid: A Strategy for Britain, IGBA 1982) calling for aid to be targeted much more on the needs of the poor. This report was promoted widely by the World Development Movement (WDM) and Oxfam. According to Bose and Burnell (1991, p. 150), the IGBA report and subsequent publications ‘helped to put issues of aid quality, and in particular the extent to which Britain’s aid benefits the poor, firmly on the development agenda in the 1980s.’ Public awareness of world poverty continued to grow throughout the decade. In 1984, drought in Ethiopia led to the deaths of more than 400,000 people. Horrifying reports and pictures of a huge famine in the country, which the BBC reporter Michael Buerk described as ‘a biblical famine in the 20th century’ and ‘the closest thing to hell on earth’, galvanised public interest in Britain’s aid efforts at a time when the government was intending to reduce aid spending by £50 million. A ‘Famine in Africa’ petition organised by the WDM and six development agencies attracted three-quarters of a million signatures. Band Aid’s ‘Do They Know It’s Christmas?’, which was released in December 1984 to raise money for the famine, sold a million copies in the first week alone and became the fastest selling single in UK chart history. The Live Aid concert in the summer of 1985, held jointly in Wembley Stadium in London and the John F. Kennedy Stadium in Philadelphia, was broadcast around the world and watched by an estimated 1.9bn people, nearly 40 per cent of the world population at the time.19 In October 1985, 20,000 people converged on the House of Commons as part of the WDM’s ‘Fight World Poverty’ mass lobby, the largest-ever mass lobby of Parliament on any issue. Four weeks later, the Government announced an additional £47 million for the aid budget, despite Treasury pressure for it to be cut (Bose and Burnell 1991, p. 151-2).

Source: http://edition.cnn.com/2005/SHOWBIZ/Music/07/01/liveaid.memories/index.html. The UN estimates that the total world population in 1985 was 4,873,781,796 people. Source: https://esa.un.org/unpd/wpp/DataQuery/ The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Events such as Live Aid or the surprising success of the Brandt Report did much to push poverty reduction up the political agenda. However, it was only over the course of the 1990s that the focus on structural adjustment and conditionality that had dominated development efforts during the 1980s gave way to a renewed focus on poverty reduction as the core objective of development. In May 1995, a group of development ministers and heads of aid agencies published a joint statement, Development Partnerships in the New Global Context, which declared that ‘[c]ombating poverty at its roots is a central challenge’ and agreed a set of principles that should inform development strategy. These included promoting good governance and the rule of law and enhancing the participation of women in economic and political life. To develop these principles into a concrete set of goals, the OECD’s Development Assistance Committee (DAC) convened a Groupe de Réflexion in early 1996. Among those who participated was John Vereker, the head of the UK’s Overseas Development Administration (ODA) and the future Permanent Secretary of DFID. This Groupe de Réflexion drew on previous UN commitments to produce a set of medium-term objectives which were approved by Development Ministers at the DAC High Level Meeting in May 1996. These objectives became known initially as the International Development Goals and were finally ratified as the Millennium Development Goals (MDGs) at the Millennium Development Summit in September 2000 (Ilott et al. 2016, p. 24; Barder 2005, p. 12). The reduction of poverty played centre-stage: the first MDG was to reduce, by 2015, the number of people living on less than USD 1.25 a day to half what it was in 1990. Labour’s development policies in opposition Between 1994 and 1996, Robin Cook chaired a Labour Party policy commission entitled Britain in the World which reviewed Labour’s policies on a range of international issues including foreign policy, security and international development (Barder 2005, p. 12). The commission recommended that Labour establish a powerful, independent department of international development that would focus on the poorest countries and give less weight to commercial and strategic interests in the distribution of aid. According to Owen Barder (2005, p. 12), the Cook Commission’s proposals ‘responded to the agenda for reform of overseas aid being advocated internationally’ by NGOs, academics and other development The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

specialists, although in practice the commission ‘did not consider the recommendations in detail, and there had been little discussion of the proposals by the time they were hardened into party policy’. The decision to make the new department independent of the FCO may have, in part, reflected a desire to avoid the mistakes of the Pergau Dam affair which had recently come to light. As discussed in Section II, this scandal involved the use of aid as a ‘sweetener’ for an arms deal to the Malaysian government despite the protestations of the ODA, which lacked the clout within Whitehall to stand up to the FCO and the Prime Minister. DFID’s status as an independent department headed by a Cabinet-level minister was not guaranteed from the outset, however. The Foreign Office, in particular, was opposed to an independent development department. DFID’s immediate predecessor, the ODA, had been a department within the Foreign Office ultimately answerable to the Foreign Secretary, although given that the ODA had its own budget and permanent secretary, the extent to which this arrangement influenced departmental activities is questionable. Clare Short, DFID’s first Secretary of State, commented in her autobiography that: Reading between the lines, I am pretty certain that, when Robin Cook consulted the Foreign Office in the six months before the election, they suggested he had made a major mistake in giving away his control over the policy and budget of the Development Department. (Short 2005, pp. 51-2) Short also reports that Tony Blair openly questioned the value of retaining the commitment in Labour’s policy document to an independent development department. Nevertheless, even before the election, Short was in close contact with John Vereker, the permanent secretary of the then ODA, who was ‘adamant that the department needed its independence to fulfil the commitments laid out in Labour’s policy document’. Short agreed and reported this to Blair, but he decided to leave the question open until after the election (Short 2005, p. 52). The proposals made by the Cook Commission were eventually passed in summary form into the 1997 Labour Party manifesto. This contained the following section:

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PROMOTING ECONOMIC AND SOCIAL DEVELOPMENT Labour will…attach much higher priority to combating global poverty and underdevelopment. According to the World Bank, there are 1.3 billion people in the world who live in absolute poverty, subsisting on less than US$1 a day, while 35,000 children die each day from readily preventable diseases. Labour believes that we have a clear moral responsibility to help combat global poverty. In government we will strengthen and restructure the British aid programme and bring development issues back into the mainstream of government decision-making. A Cabinet minister will lead a new department of international development. We will shift aid resources towards programmes that help the poorest people in the poorest countries. We reaffirm the UK's commitment to the 0.7 per cent UN aid target and in government Labour will start to reverse the decline in UK aid spending. We will work for greater consistency between the aid, trade, agriculture and economic reform policies of the EU. We will use our leadership position in the EU to maintain and enhance the position of the poorest countries during the renegotiation of the Lomo Convention. We will support further measures to reduce the debt burden borne by the world's poorest countries and to ensure that developing countries are given a fair deal in international trade. It is our aim to rejoin UNESCO. We will consider how this can be done most effectively and will ensure that the cost is met from savings elsewhere. [emphases added]

This short section set out many of the ideas that would become the core principles of DFID on foundation, and which for the most part remained throughout DFID’s history. Foremost among these is the overarching objective of reducing poverty, which the 2002 International

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Development Act would later enshrine in statute as the core purpose of all UK aid spending. 1997 General Election and New Labour In May 1997, Labour won a landslide electoral victory. After spending 18 years in opposition and losing four consecutive general elections, Labour returned to power with 418 seats, the highest proportion of seats achieved by any party in the post-war era. There had been a 10 per cent swing from the Conservatives to Labour, though – as Clare Short (2005, p. 57) notes – the vagaries of the British electoral system somewhat exaggerated the scale of Labour’s victory, since it had won with the same overall share of the vote with which it had lost in 1970. Under Blair’s leadership, the Labour Party had adopted a more centrist platform, rebranding itself as ‘New Labour’ and drawing on the ‘third way’ political philosophy of Bill Clinton’s New Democrats.20 This was presented as an attempt to move beyond the ideological debates that had dominated the Cold War-era and focus instead on ‘what works’. New Labour thus emphasised approaches to social issues such as crime, education and welfare that supposedly relied on evidence rather than dogma, stating in their manifesto that: New Labour is a party of ideas and ideals but not of outdated ideology. What counts is what works. The objectives are radical. The means will be modern.

A key part of this pragmatic approach to public policy-making was the notion that many social issues were too complicated for any government department to tackle on their own. Instead, the resources of all relevant central and local government departments, combined with the private and voluntary sector, needed to be directed towards a policy objective in concert. This focus on outcomes, evidence and ‘joined-up government’, together with a

This approach, according to the political scientist Stephen Skowronek (first coined in his book The Politics Presidents Make), seeks to ‘undermine the opposition by borrowing policies from it in an effort to seize the middle and with it to achieve political dominance’. This technique has been described as ‘triangulation’ and involves ‘deciding which is the left and the right position and placing oneself in the middle in order to maximise support’ (Short 2005, p. 44). The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

commitment to social justice, were part of the bureaucratic climate in which DFID was founded. Clare Short: Secretary of State for International Development (3 May 1997 – 12 May 2003) Two days after Labour’s electoral victory, Tony Blair asked Clare Short to establish the new Department for International Development (DFID). Short chose George Foulkes as her Parliamentary Under-Secretary.21 John Vereker was to be DFID’s Permanent Secretary,22 continuing the role he had performed in the former ODA. Short thus became the first development minister with a seat in the Cabinet since 1976, in charge of a modest, but independent, budget of £2 billion.23 24 Short writes in her autobiography that she ‘was determined to make [the] new ministry an exemplary player and to use UK influence to drive the international system forward’ (Short 2005, p. 54). According to John Vereker, Short made it clear to Tony Blair that she would accept the aid portfolio only if she were made responsible for development as a whole. Rather than being simply an aid ministry, DFID would use all the means at its disposal to combat poverty. Short felt that this was the key to DFID’s success, writing that ‘Britain became a leading player in development because we created a department with authority over the developmental aspects of all UK policy’, since this meant that it adopted ‘more coherent and thought-through positions than most other countries’. Under New Labour, centrallyadministered targets were used to manage and track departments, but for the first few years of its existence DFID’s ‘low visibility and widespread public support for the anti-poverty agenda’ gave it a degree of independence. Short joked to her special advisers that ‘we could

A junior minister in a government department. In the British Civil Service, the Permanent Secretary is the civil servant in charge of running a government department. He or she answers to a government minister but is obliged to be politically impartial and is appointed independently of the administration in power at the time. 23 Although technically the Minister of Development role had been vested in the Cabinet-level Foreign Secretary since June 1975. Day-to-day running of the Department was the responsibility of the Minister for Development, who was not a Cabinet member. 24 ‘UK Aid: Allocation of Resources’, International Development Select Committee, March 2017 https://publications.parliament.uk/pa/cm201617/cmselect/cmintdev/100/10005.htm 22

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be as radical as we liked because Alastair Campbell had no interest in what we were doing!’ (Short 2005, p. 77).25 Consolidating DFID’s responsibilities and more help for the poorest Even after DFID’s foundation, Short (2005, p. 78) notes that building the new department meant ‘taking on a series of battles in Whitehall’ and facing a ‘hostility’ to DFID that was ‘institutional rather than political’. Short was determined to draw a clear dividing line between Britain’s development programme and its diplomatic or strategic interests. Soon after taking office, she abolished the ATP scheme, the controversial programme introduced in 1978 whereby aid could be used to subsidise the purchase of British goods by developing countries. ATP had played a major role in the Pergau Dam affair, and its abolition signalled that British aid would no longer be used to promote strategic and commercial interests. The abolition of the ATP scheme was initially opposed by the Department of Trade and Industry (DTI). According to Ireton (2013, p. 50-51), On leaving an appearance before the House of Commons Select Committee on International Development to go to a meeting with the new DTI Secretary of State about the future of ATP, [Clare Short] was given a copy of a letter to the Prime Minister by the Secretary of State for Trade and Industry arguing for a retention of the ATP scheme. She cancelled the meeting, went back to the Department and wrote to the Prime Minister in uncompromising terms. The scheme was abolished.

In addition, Short chose to surrender a budget of £30 million to the Foreign Office so that they could be the sole sponsoring department of the British Council, which the former ODA had supported. This was to separate DFID from the British Council’s diplomatic and cultural activities so it could focus solely on development (Ireton 2013, p. 51).

Alastair Campbell was Tony Blair’s feared spokesman, campaign manager and communications director, and a key architect of the New Labour project. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Clare Short’s tenure as development secretary was characterised by an emphasis on partnership, recipient country ownership of development initiatives, and an international commitment to shared poverty reduction targets (Valters and Whitty 2017, p. 8). Short won praise from some academics and policy experts for her ‘willingness to take risks and implement largely untested tools for poverty reduction’ such as budget support, and according to Devex is ‘credited still for DFID’s continued focus on international collaboration in poverty reduction’. 1997 White Paper: Eliminating World Poverty Six months after its foundation, DFID officially set out its aims and objectives in a white paper, the first such statement on government development policy for 22 years. Entitled Eliminating World Poverty: A Challenge for the 21st Century, the paper identified poverty as ‘the single greatest challenge which the world faces’ and promised to ‘[r]efocus our international development efforts on the elimination of poverty and encouragement of economic growth which benefits the poor’. In line with New Labour’s emphasis on results and measurement, it promised to ‘[m]easure the effectiveness of our efforts…against the [international development] targets, including the aim of halving the proportion of the world’s population living in extreme poverty by 2015’, which would later be ratified as the first Millennium Development Goal in 2000. It also emphasised that the ‘full range of Government policies affecting developing countries’, including environment, trade and investment, would take account of the government’s development objectives, building on New Labour’s focus on ‘joined-up government’. In addition, it stated that ‘the Government will start to reverse the decline in UK spending on development assistance, and reaffirms the UK’s commitment to the 0.7 per cent UN target’, though it did not specify a date for the target to be met. It should be noted that the UK, along with many other wealthy Western countries, had been nominally committed to spending 0.7 per cent of GDP (later GNI) on official development assistance (ODA) since 1970, although few nations outside Scandinavia consistently met the target in practice. As part of its emphasis on poverty reduction, DFID decided to focus its efforts more on the countries with the largest numbers of poor people, where World Bank research had shown

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aid could be most effective (Burnside & Dollar 1997 and Collier & Dollar 2002). In 2002, DFID publicly agreed to increase the proportion of its spending that went to the poorest countries from 78 to 90 per cent, which became known as the ‘90-10 rule’. From 1998, DFID also worked with its European partners to reverse the trend of European Commission aid spending increasingly going to better-off countries (Barder 2005, p. 18). The 1997 white paper summarised DFID’s objectives in the following statement of purpose:

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2000 Millennium Development Summit and the MDGs In September 2000, the leaders of 189 countries met in New York for the UN Millennium Summit, at the time the largest gathering of world leaders in history. This led to the adoption by the UN General Assembly of the Millennium Declaration, which included the eight Millennium Development Goals (MDGs): 1. To eradicate extreme poverty and hunger; 2. To achieve universal primary education; 3. To promote gender equality and empower women; 4. To reduce child mortality; 5. To improve maternal health; 6. To combat HIV/AIDS, malaria, and other diseases; 7. To ensure environmental sustainability 8. To develop a global partnership for development These were based on the OECD’s International Development Targets and the signatories agreed to work to meet them by 2015. The MDGs provided a common roadmap for international development efforts and set the framework for much of DFID’s subsequent work. 2000 White Paper: Making Globalisation Work for the Poor Two months after the Millennium Development Summit, DFID published its second white paper, Eliminating World Poverty: Making Globalisation Work for the Poor. This examined in detail how the forces of globalisation could be harnessed to reduce poverty and how developed countries could work with developing countries to support this, with chapters on promoting effective governments and markets, investing in people, harnessing private finance, capturing gains from trade, tackling global environmental problems, using aid more effectively, and strengthening the international system. The 2000 white paper also The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

reaffirmed the International Development Targets committed to in DFID’s 1997 paper, which were broadly the same as the MDGs that had just been agreed to in New York. In 2002, the government passed the International Development Act 2002,26 which replaced the Overseas Development and Co-operation Act 1980. This stated that the Development Minister ‘may provide any person or body with development assistance’ if he or she is satisfied that ‘the provision of the assistance is likely to contribute to a reduction of poverty’. Enshrining in law the single purpose of aid spending as poverty reduction was an unprecedented step. The Act also made it illegal for UK aid to be tied to British goods and services, a clear departure from the aid policy of previous decades and still unusual among aid donors. Although the International Development Act 2002 prevented DFID from using aid to fund initiatives whose primary objectives were security considerations, a 2005 DFID policy document (Fighting poverty to build a safer world, March 2005) declared that ‘[n]o country…can remain aloof from the effects of insecurity elsewhere’ and that ‘[p]overty, underdevelopment and fragile states create fertile conditions for conflict and the emergence of new security threats, including international crime and terrorism.’ DFID thus committed to increasing its efforts in conflict prevention and other related areas. This commitment became critical in the wake of the terrorist attacks in New York on 11th September 2001. DFID’s response was to increase its support for ‘weak and failing states’ in which terrorist organisations could organise and train new recruits. After the US-led Coalition invasions of Afghanistan and Iraq the Government placed ‘considerable pressure’ on DFID to increase aid spending for reconstruction in those countries; however, the 90-10 rule made it difficult to spend more in Iraq, which was a middle-income country. DFID’s response was to ‘accelerate planned withdrawal’ from middle-income countries and reduce funding for others so that it could spend more in Iraq without breaching the rule (Barder 2005, p.18-19).

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End of an era The reverberations of the atrocities committed in New York and the subsequent invasions of Afghanistan and Iraq were felt in Whitehall in other ways. Much of DFID’s early success is attributable to the principled and energetic leadership of Clare Short, whose determination ensured that DFID was truly independent and responsible solely for development in the face of a somewhat ambivalent party leadership and an initially ‘hostile’ Whitehall environment (Short 2005). Short’s tenure as development secretary ended when she resigned in May 2003 in protest at Britain’s invasion of Iraq. Short had repeatedly described Blair as ‘reckless’ and had threatened to resign two months earlier before backing down and temporarily supporting the Government. In her resignation statement in the House of Commons, Short stated that DFID was ‘known throughout the world as one of the finest development agencies in the international system’ and an ‘organisation of which Britain can be proud’. Having served for over five years, Short remains DFID’s longest serving Secretary of State. Short created a fresh strategic outlook for UK aid. DFID’s new approach was also ‘impeccably New Labour’ (Hewitt and Killick, 1998: p.188), articulated through statements of proper state regulation and fiscal rectitude, clearly defining itself against the previous Conservative approach to aid while also remaining palatable to Labour’s right-wing and the Treasury. Baroness Amos (12 May – 6 October 2003) and Hilary Benn (6 October 2003 – 27 June 2007) Short was succeeded by Baroness Amos, whose tenure lasted just six months before she was appointed Leader of the House of Lords in October 2003 and left her post at DFID. Hilary Benn, who had been Short’s deputy during the last two years of her tenure, was subsequently appointed Secretary of State. Benn’s new brief arrived at a tumultuous time for DFID, with headlines dominated by the ‘fraught reconstruction of Iraq’, Afghanistan ‘constantly on the verge of subsiding into chaos’, and the ongoing ‘scourge of famine and

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disease in Africa’.27 As development secretary, Benn oversaw DFID’s response to the 2003 Bam earthquake, the ongoing situation in Darfur which began in February 2003, the 2004 Indian Ocean earthquake and tsunami, the 2005 Kashmir earthquake, and the 2005 NiasSimeulue earthquake. According to Devex (2017), Benn followed Short in ‘attempting to blend relief efforts into longer-term development goals’, and DFID made ‘huge strides’ in its work in humanitarian response and disaster relief. The aid academic Roger Riddell (2014) has argued that the distinction between humanitarian and development aid was never as clear-cut as critics of development aid often suppose, and Benn is to be credited for recognising that humanitarian and developmental objectives are inextricably interlinked. Benn himself suggested that he continued DFID’s work with a similar strategic outlook to Short’s (Valters and Whitty, 2017), and the same was suggested in a new White Paper (DFID, 2005). Benn’s tenure was a heady time for development, with aid budgets growing unabated and hopes of ‘making poverty history’ popular in the rhetoric about Britain’s role in the world. Early into his time as development secretary, Benn secured agreement in 2004 with Gordon Brown, then the Chancellor,28 that the UK would set a timetable to reach 0.7 per cent aid spending by 2013 (Barder 2005, p. 23). He then oversaw the first significant increase in DFID’s budget towards this target, with aid spending rising from 0.36 per cent of GNI in 2004 to 0.47 per cent in 2005, its highest level since 1979. In addition, the principles of partnership, recipient country ownership and deference to shared international development targets which had characterised Clare Short’s tenure were given permanent expression by Hilary Benn in the 2005 Paris Declaration on Aid Effectiveness, which DFID played a leading role in creating. The Paris Declaration, which was endorsed by more than 100 signatories including donor- and developing-country governments, multilateral aid agencies, and development banks, remains a landmark document in the history of international development. As well as establishing targets to be met by 2010 to improve the delivery and effectiveness of aid, the Paris Declaration divided

Profile: Hilary Benn, The Guardian, October 2003, https://www.theguardian.com/society/2003/oct/06/internationalaidanddevelopment.voluntarysector 28 The Chancellor of the Exchequer, the head of HM Treasury, is equivalent to the role of finance minister in other nations. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

responsibilities between donors and recipient governments, which are referred to as ‘partner countries’ so as to move away from the rhetoric of paternalism and charity. The Paris Declaration was followed in 2008 by the Accra Agenda for Action, which took stock of progress towards the Paris targets and put an additional emphasis on developing countries’ capacity to manage their own futures.29 Other notable milestones from Benn’s time at DFID include his call for reform of the multilateral system, criticising excessive bureaucracy at the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) and the UN High Commission for Refugees; and his refusal to release £50 million of British funding for the World Bank’s International Development Association (IDA) unless it met its commitments to reform the way it attached conditions to its aid.30 The events of Benn’s tenure as development secretary are significant in terms of the UK consolidating its position as an aid superpower, as argued by the academic Myles Wickstead (2009, pp. 78-79). The events of 2004-05 in particular – with the confluence of the Make Poverty History campaign, the Paris Declaration, as well as the pre-G8 Gleneagles Summit and the Commission for Africa that had preceded it – saw the UK affirm its position as a global broker in advancing agreement on poverty reduction. This period combined ‘government reach and commitment, intellectual fire-power, and the campaigning strengths of the NGO community, all together raising the priority of international development in general and Africa in particular within the international agenda’ (Wickstead 2009, p. 77). By 2005, with the UK having exerted its influence through multilateral channels such as the G8, the OECD/DAC, the World Bank and the IMF, Britain ‘was unquestionably an aid superpower’ (ibid, p. 78).

The Paris Declaration on Aid Effectiveness (2005) and the Accra Agenda for Action (2008) http://www.oecd.org/dac/effectiveness/34428351.pdf 30 Benn considers withholding £50 million from World Bank, The National Archives, September 2006, http://webarchive.nationalarchives.gov.uk/20090605235748/http://www.dfid.gov.uk/Media-Room/NewsStories/2006-to-do/Benn-considers-withholding-50-million-from-World-Bank/ The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Douglas Alexander (28 June 2007 – 11 May 2010) On 10th May 2007, Tony Blair announced to his constituency Labour Party that he would resign as prime minister and party leader. Following Gordon Brown’s victory in the ensuing Labour leadership election, Hilary Benn was moved to the Department for Environment, Food and Rural Affairs and Douglas Alexander, formerly the Secretary of State for Scotland, was appointed the new Secretary of State for International Development. An important legacy of Douglas Alexander’s time in office was his role in launching the International Aid Transparency Initiative (IATI) at the Third High Level Forum on Aid Effectiveness in Accra, Ghana, alongside Kemal Dervis, Head of the UN Development Programme (UNDP), James Musoni, the Rwandan Finance Minister, and Kumi Naidoo, the president of CIVICUS. Donor signatories, which included DFID, the World Bank and UNDP, committed to ‘disclose regular, detailed and timely information on volume, allocation and…results of development expenditure’, to ‘support information systems for managing aid’, and to ‘provide full and timely information on annual commitments and actual disbursements’.31 The IATI also provides the IATI Standard, a set of rules and guidance for sharing information on humanitarian and development resources in an internationally comparable way. Between 2006 and 2007, the final year of Hilary Benn’s time in office, the UK’s ODA spending had fallen sharply from 0.51 to 0.36 per cent, though DFID maintained that it was still committed to meeting the UN’s 0.7 per cent target by 2013.32 Despite the 2008 financial crisis, aid spending recovered during Douglas Alexander’s tenure as development secretary, climbing steadily by 0.07 per cent each year from 0.37 per cent in 2007 to 0.57 per cent in 2010. DFID’s success at persuading the Treasury to continue to increase its budget during a period of economic crisis came at a cost, however. As average incomes fell and

IATI Accra Statement, June 2009, https://www.aidtransparency.net/wp-content/uploads/2009/06/iati-accrastatement-p1.pdf 32 Aid to developing world falls for second year, The Guardian, April 2008 https://www.theguardian.com/business/2008/apr/04/g8.eu.aid.debt

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unemployment rose, public support for aid declined (Valters and Whitty 2017, p. 9). According to Valters and Whitty (2017, p. 9), ‘Douglas Alexander and the ministerial and civil service leadership of DFID felt the department lacked the control and evidence to support its spending’, and ‘Whitehall and Westminster also insisted that the project level accountability apparatus was insufficient.’ The result was what Valters and Whitty (2017, p. 9) call the ‘long retreat from Clare Short’s “contribution and partnership” approach’, under which DFID was willing to try experimental techniques and put less faith in top-down targets than other New Labour departments. Under Alexander, civil servants deepened results-based management (RBM) reforms, which according to Valters and Whitty (2017, p. 9) ‘co-habited awkwardly with the ongoing public adherence to the Paris Declaration’, and changed the way projects were reviewed so that they were deemed successful only if they had achieved pre-planned targets. Anders (2017) notes that, despite the irritation these reforms caused some in the development community, Douglas Alexander and Gordon Brown ‘were mostly spared the intense levels of criticism that would plague their Conservative successors’. This is not to say that the expansion of DFID under 13 years of Labour governments did not face criticism. Even before the financial crisis and recession had impacted on the UK, concerns were raised about DFID’s growing budget and whether taxpayers were seeing value for money in the department’s work. The TaxPayers’ Alliance, a pressure group formed in 2004 to campaign for lower taxes, was highly critical of the aid programme and in 2007 described DFID as ‘an organisation that has become synonymous with inefficiency and wishful thinking’ (TPA 2007). The TPA highlighted a report by the charity ActionAid in 2006 that had found an eighth of DFID’s budget was being spent on consultants earning six-figure salaries, with taxpayer money contributing to the private school fees of consultants’ children, and one third of development assistance was identified as badly-spent ‘phantom aid’ which included double-counted debt relief.33

‘Aid wasted on paying for private schools, says charity’, The Guardian, July 2006 https://www.theguardian.com/society/2006/jul/05/internationalaidanddevelopment.politics

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Although DFID had rejected ActionAid’s findings – arguing that debt relief and technical assistance ‘show real results’ such as improving tax collection in Rwanda34 – detractors were also implicating DFID as a financier of bribery and corruption in recipient countries. Because Clare Short had ended tied aid, the TPA argued that this meant politicians in recipient countries were using money from direct contributions to extract bribes from the world’s suppliers, estimating that British taxpayers were spending ‘at least £1 billion per annum topping up the Swiss bank accounts of corrupt third world leaders’ (TPA 2007). Writing in 2009, the journalist Ian Birrell – an aid sceptic who at the time was deputy editor-in-chief of The Independent – was critical of UK aid financing regimes in Rwanda, Uganda and Kenya whose leaders had been accused of human rights abuses and corruption. Birrell (2009, para. 7) argued that DFID’s increasing budget meant that the department’s staff were compelled to spend it – despite there being ‘a finite number of countries that need aid, deserve aid, and are not so shattered that it is like pouring water into a sieve’ – and that when decisions were taken to back certain regimes officials tended to stick by them. Birrell also asserted that the expansion of DFID had affected the coherency of British foreign policy, whereby the size of the department’s budget compared to the Foreign Office meant that foreign policy in sub-Saharan Africa was now being dictated by DFID – as an example, he cited a case from Kenya where DFID staff had tried to prevent the British ambassador from speaking out against regime corruption (para. 10-11). He went on to argue that there was ‘too much emphasis on the ambiguous cause of development rather than relentless focus on good governance, human rights and long-term strategic issues’ and that the UK’s approach to Africa was ‘riddled with contradictions’ (para. 10, 14). It is noteworthy that over a decade before DFID would be merged back into the Foreign Office, concerns were being raised about the divergence of the two departments’ objectives, the effect this had on the consistency of the UK’s foreign policy agenda, and whether DFID’s increasing budget offered value for money to British taxpayers. These are

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concerns that the Conservative Party, in government since 2010, would later seek to address. Andrew Mitchell (12 May 2010 – 4 September 2012) Since 2005, the Shadow Secretary of State for International Development had been the Conservative MP Andrew Mitchell. In this role, Mitchell travelled widely to poverty-stricken countries such as Sierra Leone, Ghana, Ethiopia and the Democratic Republic of the Congo and called for humanitarian aid to be delivered rapidly in response to the 2010 Haiti earthquake. Mitchell would become the development secretary following the 2010 general election, when the Conservatives entered government as the senior party in coalition with the Liberal Democrats. In a debate shortly after Mitchell’s appointment, his deputy at DFID, Alan Duncan MP, stated that Mitchell’s ‘passion for international development is known to all in the Chamber’ and quoted the journalist Jon Snow as saying that ‘Andrew Mitchell is unquestionably the best prepared Secretary of State - nobody has waited longer in the wings and everyone in the sector knows of his commitment to the sector’.35 One World Conservatism When David Cameron was elected as leader of the Conservative Party in 2005 he established the Globalisation and Global Poverty Policy Group, chaired by Peter Lilley MP, whose research would go on to reshape Conservative policy on international development going into the 2010 election. Lilley’s submission to the Shadow Cabinet in July 2007, In It Together: The Attack on Global Poverty, found that aid works in the right circumstances and that the focus should shift to improving aid effectiveness rather than simply the quantity of delivery (Lilley 2007, p. 7). The report also identified economic growth and education as crucial to poverty alleviation and suggested a package of measures to improve trading conditions for poorer countries. Referring to DFID specifically, the report warned that the department was too focused on inputs rather than outputs and on spending rather than monitoring performance. Amongst its recommendations, the report proposed greater donor transparency in the international community with measures on performance and 35

HC Deb 1 July 2010, vol 512, col 1104. [Source] The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

effectiveness, and that DFID should continue to develop mechanisms for longer-term, more stable and more flexible funding (Lilley 2007, p. 14). The policy report was followed by an official party Green Paper in 2009 titled One World Conservatism, which set the direction and tone of what aid policy would look like under a Conservative government. The Green Paper pledged to achieve the 0.7 per cent spending target and to keep DFID as an independent department, but with a ‘tough new approach’ designed to maximise value for money in the development budget.36 This new approach would include a ‘root-and-branch review’ of aid recipient countries, a drive for full transparency, performance-based funding for multilaterals, prioritisation of private sectorled growth and wealth creation, and greater prominence given to conflict prevention and resolution, stabilisation and peacekeeping. The notion of ‘One World Conservatism’ was an extension of the Disraelian notion of One Nation Conservatism, which emphasised the interconnectedness of different groups in society and the obligation of the more privileged members to help the worse-off. The Green Paper was incorporated into the Conservatives’ 2010 manifesto, which upheld the commitment made by the previous Labour government to increase aid spending to the UN target of 0.7 per cent of national income and made the additional step of committing to ‘legislate in the first session of a new Parliament to lock in this level of spending for every year from 2013’ it would also ‘keep aid untied from commercial interests.’ In doing so, Cameron and Mitchell carved a distinctly different party position on international development to previous Conservative governments. The manifesto bargain The decision to increase aid spending to 0.7 per cent of national income at a time of austerity and cuts to other government departments’ budgets was met with some

‘One World Conservatism Summary’ July 2009 https://conservativehome.blogs.com/files/one-worldconservatism.pdf The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

scepticism from the general public.37 Anticipating this, the manifesto presented taxpayers with the following ‘bargain’: [I]n return for contributing your hard-earned money to helping the world’s poorest people, it is our duty to spend every penny of aid effectively. We will ensure British aid money is properly spent by publishing full details of British aid on the DFID website. […] In addition, we will work to bring about improved transparency of aid spending by other development organisations. (Conservative Manifesto 2010, p. 117)

This was the start of what Valters and Whitty (2017) call the ‘results agenda’, which was one of the defining characteristics of the Conservatives’ approach to international development. Mitchell recalled DFID as ‘sticking out like a sore thumb’ and having ‘been quite difficult’ when he first took office, and said ‘the department needed to be turned from this sort of, slightly difficult teenage child into a department of state for development in the developing world’ (Institute for Government, 2015). On taking office, Andrew Mitchell ‘immediately positioned results, evidence, value for money and transparency at the centre of aid management’, which for him was ‘what a politically centre-right development policy looked like’ (Valters and Whitty 2017, p. 9). Over Mitchell’s first 18 months in office, DFID’s aid programme was cut from 43 countries to 26 bilateral aid programmes, and targets were set centrally with country offices having ‘to bid for funding based on the results they thought they could achieve’: And so in the end we said, ‘Instead of you in Ethiopia, putting in for a budget increase of three per cent and getting it, we’re going to ask what you can produce. And so you can say to us, well we can get 50,000 girls into school in Ethiopia, and we say “Fine, what’s it going to cost?”’ And so we created an internal market where the Ethiopian office might call the Rwandan office and say for example,’ How is it that you can get girls into school for £40 a year and 37 ‘

Voters doubtful on David Cameron's aid policy’, The Telegraph, August 2011 https://www.telegraph.co.uk/news/politics/david-cameron/8679329/Voters-doubtful-on-David-Cameronsforeign-aid-policy.html

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we can’t get it below £60?’ We created an internal market in results…it’s been copied all around the world; the EU programme now do it, the Americans do it, the Australians do it, and it was a British initiative’ (Mitchell at the Institute for Government, 2015) The introduction of ‘payment by results’ (PBR) allowed DFID, where it was considered appropriate, to withhold paying aid delivery organisations in full until they could demonstrate the impact of their interventions, which was intended to promote efficiency, reduce waste, and transfer risk away from the taxpayer. In 2011, Mitchell founded the Independent Commission for Aid Impact (ICAI) to scrutinise UK aid spending and improve aid effectiveness. The ICAI conducts independent evaluations of aid projects and reported to the House of Commons Select Committee on International Development. In 2011, DFID reaffirmed its commitment to the IATI, which DFID had played an important part in launching under Douglas Alexander (see previous subsection), and became the first organisation to publish its aid information to the IATI.38 In a further drive towards greater aid transparency, in 2013 DFID also launched its Development Tracker website which maps the UK’s aid spending by sector, location and UK government department and publishes detailed budget data for each individual aid project funded by UK aid.39 For Mitchell’s supporters, these reforms were a welcome departure from Labour’s focus on spending targets rather than tangible results and a reluctance to be held accountable to taxpayers for its development spending. For his critics, however, reforms such as PBR disincentivised interventions in riskier environments, even if these could potentially have a greater impact, and penalised smaller NGOs which could not afford to offload the risk from DFID (Anders 2017). The academic Dan Honig supported this argument in his book Navigation by Judgment stating that the use of centrally-administered targets can restrict the ability of aid delivery organisations to respond rapidly to changing events in the field. DFID’s adoption of the ‘results agenda’ was not unique among Western donors and was part of a worldwide trend. As Valters and Whitty (2017, p. 9) note, several other development

38 39

IATI, About https://www.aidtransparency.net/about DevTracker https://devtracker.dfid.gov.uk/ The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

agencies were moving in this direction due to domestic factors and a ‘growing international scepticism about the existing [international development] paradigm’. Aid in the national interest A second shift in the culture of DFID under Andrew Mitchell and the Coalition government was the use of national interest arguments to justify Britain’s development programme. As with the results agenda, this attempted to persuade voters of the value of Britain’s rapidly rising aid budget despite austerity measures elsewhere. This did not, though, reverse the principle established by Clare Short that there should be a clear separation between DFID’s objectives and the UK’s diplomatic or strategic interests. Instead, the national interest argument referred to the ‘soft power’ and security benefits that accrued indirectly from Britain’s development spending. Mitchell argued that: Our security in London and Birmingham is not just provided by soldiers and tanks and fighter jets, it is also provided by training the police in Afghanistan, by building up governance structures in the Middle East and by getting girls into school in the Horn of Africa. Those things are all part of what makes us safer.40

Britain’s spending on ODA as a percentage of national income remained effectively unchanged during Mitchell’s tenure as development secretary at 0.57 per cent of national income in 2010 and 0.56 per cent in 2011. Reforming the CDC Group Mitchell also used his time as development secretary to introduce several reforms to the CDC Group, DFID’s development finance institution. The institution had attracted criticism in the 2000s following a reorganisation in 2004, when the emerging markets private equity firm Actis Capital was formed as a spinout of CDC. The new company had been set up to manage public funds worth £1.5 billion, with a 60 per cent majority stake sold without competition to its managers for £373,000 – a figure later criticised as a significant under40

‘Aid makes Britain safer and richer’ Andrew Mitchell, in The Telegraph, January 2012 https://www.telegraph.co.uk/news/9028105/Andrew-Mitchell-aid-makes-Britain-safer-and-richer.html The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

valuation (Northam 2008). With the establishment of Actis, the CDC Group stopped making direct investments and became a fund of funds company, and by the late 2000s concerns were mounting that development priorities were being side-lined for profit. Mitchell recognised this in a statement to the House of Commons in October 2010, saying that ‘CDC has become less directly engaged in serving the needs of development’ and announcing a desire to reform the company.41 Mitchell’s announcement was followed by an International Development Committee inquiry. The Committee reported in March 2011 and criticised the excessive remuneration of CDC’s executive staff and highlighted a deficit in transparency. The report also expressed concern that CDC had made investments that the private sector would have made anyway, with over half of its investments concentrated in four middle-income countries and too few investments in sectors which most benefit the poor, such as agriculture and infrastructure (IDC 2011, p.3). Mitchell’s reforms sought to address the issues highlighted by the select committee. In May 2011, DFID and CDC published a new business plan for CDC Group to evolve the company into ‘a more flexible, transparent and distinctive development finance institution focused on the poorest parts of the world’ (CDC 2011, para. 2). Key reforms included the reintroduction of direct investments alongside the fund of funds model; a new and exclusive focus on investment in sub-Saharan Africa and South Asia; new development priorities with an emphasis on environment, social and governance standards; improved transparency with the publication of more business information; an updated Investment Code and a new Innovation Division; and a revised remuneration framework that appropriately reflected CDC’s position as a publicly-owned body. Commenting on the reforms, Mitchell said CDC would be ‘able to influence and control the impact of their capital and measure its success in reducing poverty, not simply in turning a corporate profit’ (ibid, para. 12).

Hansard Written Ministerial Statements 12 Oct 2010 col 9WS [Electronic version] The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Justine Greening (4 September 2012 – 14 July 2016) In September 2012, the Prime Minister David Cameron held a Cabinet reshuffle and appointed Andrew Mitchell as Chief Whip. Mitchell was succeeded as the Secretary of State for International Development by Justine Greening, who had previously been the Secretary of State for Transport. Greening’s move was viewed by some, including the then-Mayor of London Boris Johnson, as a demotion from her previous role as a result of her opposition to a third runway at Heathrow Airport,42 and Mitchell later suggested in an interview with the Mail on Sunday that Greening had not originally wanted the job.43 Nevertheless, according to Valters and Whitty (2017, p. 30), Greening went on to become an ‘ardent defender of aid’ as being both morally right and in the UK’s national interest. As development secretary, Greening continued Andrew Mitchell’s focus on results, value for money and transparency in Britain’s aid spending, while also placing stronger emphasis on the national interest, the role of private finance and the CDC Group, and preferencing UKbased contractors. In a speech shortly after her appointment, Greening spoke about the importance of ‘transparency of aid budgets’ and stated that she would ‘continue to focus on getting value for money from our aid programmes.’44 Mitchell’s extensive reforms during his relatively short time as development secretary had thrown up many challenges, and during Greening’s tenure ‘her staff sought to digest and balance some of the results agenda’s more problematic implications.’ The ICAI, the aid watchdog which Mitchell had himself founded, criticised the results agenda in 2014 for prioritising short-term efficiency over longer-term, sustainable impact (Valters and Whitty 2017, p. 9). Greening initiated many internal reforms, pledged to cut back unnecessary bureaucracy, and ‘allow[ed] staff more time to focus on real-world delivery’ (ibid). Alongside Lynne Featherstone, her Liberal Democrat 42

Boris Johnson condemns Justine Greening ‘demotion over Heathrow’, The Metro, September 2012 https://metro.co.uk/2012/09/04/boris-johnson-condemns-justine-greening-demotion-over-heathrow-564769/ 43 ‘

Greening’s gone AWOL… but then she didn’t want the job anyway: Former International Secretary Andrew Mitchell launches extraordinary attack on his predecessor for failing to stick up for Britain’s £12bn foreign aid spend’, The Daily Mail, April 2016 http://www.dailymail.co.uk/news/article-3532043/Greening-s-gone-AWOL-didn-t-want-job-FormerInternational-Secretary-Andrew-Mitchell-launches-extraordinary-attack-predecessor-failing-stick-Britain-s12bn-foreign-aid-spend.html 44 Speech by Justine Greening MP at an event hosted by Publish What You Fund, Bond and UK Aid Network, 6 December 2012 [Online transcript]. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

junior minister, Greening also championed the cause of women and girls in developing countries. Before entering politics, Greening had been a professional accountant and finance manager, and in a 2015 speech she claimed that she had arrived at DFID three years earlier ‘armed with my accountant’s eye.’45 During her tenure, she increased internal scrutiny of aid spending by lowering the spending threshold requiring a personal sign-off from the Secretary of State from £40 million to £5 million and accelerating the use of payment-by-results, and supported the introduction of biennial internal audit procedures for each country office (Valters and Whitty 2017, p. 30). Greening also announced that DFID would phase out budget support, an aid modality that had once been supported by Clare Short for giving greater agency to aid recipients but which had acquired a reputation for waste and unaccountability as a result of several scandals (Tran 2011, Anderson 2014, DFID & HMT 2015). In 2015, DFID and HM Treasury jointly released a new aid strategy document entitled UK aid: tackling global challenges in the national interest. This set out four strategic objectives for UK aid, placed ‘national interest’ at the heart of the UK’s aid programme, and strengthened DFID’s responsibility to provide ‘value for money’. In addition, it established a commitment to spend 30 per cent of Britain’s ODA through non-DFID departments and stated that all departments involved in aid spending must rank in the top two categories (‘good’ or ‘very good’) of Publish What You Fund’s Aid Transparency Index by 2020.

Speech by Justine Greening MP at Chatham House, 15 October 2015 [Online transcript]. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

Figure 3: Four strategic objectives for UK aid. Source: DFID & HMT (2015) In 2012-13, Greening presided over a £2.18 billion increase in DFID’s budget, which raised Britain’s percentage aid spending to 0.7 per cent of national income, its highest ever level. This made Britain the first G8 country to meet the UN’s 40-year-old aid spending target, though Sweden and Norway had already met the target in 1975 and 1976 respectively. This was a tremendous symbolic victory for the development community and a key achievement of the Coalition government, as it finally met a long-term objective the UK Government had nominally adhered to since 1970. Meeting the target by 2013 was also significant since this was the deadline that had been agreed by Hilary Benn and Gordon Brown in 2004. David Cameron, the Conservative Prime Minister from 2010 to 2016, later wrote on Twitter that ‘[o]thers promised, we did it’.46 The increase in aid spending was criticised by the press – especially the tabloids – and led to a number of hostile editorials and news stories about alleged aid waste. The value of a ringfenced aid target, which had been challenged by a 2012 House of Lords report for prioritising the ‘amount spent rather than the result achieved’,47 was also unpopular with many backbenchers, particularly in the Conservative Party. In spite of this, two years later Michael Moore MP, a Liberal Democrat, proposed a Private Member’s Bill, which with the 46

David Cameron, Twitter, https://twitter.com/David_Cameron/status/938479581748592640 Report on Development Aid, House of Lords Select Committee on Economic Affairs, March 2012 https://www.parliament.uk/business/committees/committees-a-z/lords-select/economic-affairscommittee/news/report-on-development-aid/ 47

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Government’s tacit approval enshrined the 0.7 per cent target in law with the International Development (Official Development Assistance Target) Act 2015 (see Lunn and Booth 2016). The UK’s aid spending has remained at 0.7 per cent of national income ever since (see Figure 4).

Figure 4: UK development assistance spending as a percentage of GNI, 1997-2019. Priti Patel (14 July 2016 – 8 November 2017) On 23 June 2016, Britain held a referendum on the question ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’. The turnout was 72 per cent, the highest ever for a UK-wide referendum and the highest for any national vote since 1992. Britain voted to leave by 52 per cent to 48 per cent. On 24 June, a few hours after the results became clear, David Cameron – who had campaigned for Remain – announced that he would resign as Prime Minister. The ensuing party leadership election was won by the former Home Secretary, Theresa May, who became Prime Minister on 13 July.

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Shortly after taking office, May held what the Daily Telegraph described as ‘one of the most brutal reshuffles in modern British political history’.48 As part of the reshuffle, Justine Greening was promoted to Education Secretary with Priti Patel replacing her at DFID. Patel’s appointment caused some concern in the development community (Bush 2016), and Diane Abbott, then Labour’s Shadow Health Secretary, wrote in The Independent that ‘putting [Priti Patel] in charge of the Department for International Development is like putting a fox in charge of chicken safety’.49 Patel had suggested in 2013 that DFID should be replaced with a Department of International Trade and Development, and after taking office declared that too much of Britain’s aid money was ‘stolen or wasted on inappropriate projects’ (Slack 2016). Patel claimed to have a ‘four-inch thick dossier’ on her desk of projects which she regarded as wasteful (Wooding 2017), several of which she publicly terminated. The most prominent of these was DFID’s support for Yegna, an Ethiopian girl band that raised awareness of child marriage, sexual harassment and the importance of education for women. The Daily Mail had for several years used Yegna as an example of aid spending profligacy, branding it the ‘Ethiopian Spice Girls’ in 2013. DFID had given £3.7 million in 2015 to Girl Effect, Yegna’s parent organisation, and had planned to give a further £11.8 million between 2015 and 2018. 50

In January 2017 Patel announced that DFID was terminating its funding. This was lauded

by the Daily Mail and several aid sceptic backbench MPs, though the International Development Select Committee later criticised the decision, noting that ‘programmes occasionally appear to be closed based on negative media headlines, despite performing well in DFID’s own assessments’ (IDC 2017, s. 34). Molly Anders (2017) describes Priti Patel as ‘possibly the most determined standard bearer of aid in the national interest in DFID’s short history’. As a vocal supporter of leaving the

48 ‘

Theresa May wields the axe on Cameron's Notting Hill set in 'most ruthless cull in modern British political history' with Michael Gove among nine ministerial sackings or resignations’, The Telegraph https://www.telegraph.co.uk/news/2016/07/14/theresa-mays-cabinet-reshuffle-who-will-join-boris-johnson-and/ 49 ‘ Putting Priti Patel in charge of international development is like putting a fox in charge of chicken safety’, Diane Abbott in The Independent, July 2016 https://www.independent.co.uk/voices/putting-priti-patel-in-charge-of-international-development-is-like-puttinga-fox-in-charge-of-a7138241.html 50 GirlHub Ethiopia Phase II – Project Documents https://devtracker.dfid.gov.uk/projects/GB-1-204957; ‘Yegna, Ethiopia’s “Spice Girls” lose funding’ BBC News, January 2017 https://www.bbc.co.uk/news/uk-38538631 The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

European Union, Patel argued that Britain could ‘leverage’ its aid budget to secure better trade deals with developing countries51. The intrinsic relationship between UK aid and trade was ultimately touched upon in Agenda 2030: Delivering the Global Goals, a DFID paper published in March 2017 that outlined Britain’s approach to delivering the Sustainable Development Goals (SDGs), which had been agreed at the UN General Assembly in 2015 to build upon and take forward the Millennium Development Goals. Although Agenda 2030 did not make any suggestion that the UK was to consider tying aid directly to new trade opportunities, it did commit the new Department for International Trade (DIT) to working closely with DFID to deepen the UK’s trade relationships with developing countries, with the cross-departmental Trade for Development Team also working with the FCO and the Department for Business, Energy and Industrial Strategy (BEIS) to support economic growth in partner countries.52

Figure 5: The 17 Sustainable Development Goals, set in 2015 by the UN General Assembly. Source: United Nations. 51 ‘

Britain to ‘leverage’ £11bn of foreign aid to build new trade deals after Brexit’, The Telegraph, July 2016 https://www.telegraph.co.uk/news/2016/07/30/britain-to-leverage-11bn-of-foreign-aid-to-build-new-trade-deals/ 52 Agenda 2030 The UK Government’s approach to delivering the Global Goals for Sustainable Development - at home and around the world https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/603500/Agend a-2030-Report4.pdf

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Ahead of the June 2017 general election, the Conservative manifesto recommitted a Conservative government to the 0.7 per cent spending target and to use the aid budget in line with the SDGs.53 The manifesto included a suggestion that there would also be a review of ODA spending rules, with the statement that ‘[w]e do not believe that international definitions of development assistance always help in determining how money should be spent, on whom and for what purpose…we will work with like-minded countries to change the rules so that they are updated…If that does not work, we will change the law to allow us to use a better definition of development spending’ (p. 39). This policy led to accusations from Labour that abandoning the OECD definition would undermine the 0.7 per cent commitment.54 Dr Michael Jennings, from the Department of Development Studies at the School of Oriental and African Studies, assessed that the manifesto indicated a Conservative desire to build military spending in some capacity into ODA spending, which would ‘further cement the idea that international aid is part of the United Kingdom’s tool kit for working toward UK national strategic interests’ (Jennings 2017). The desire to spend more money on defence and less on aid has since been espoused explicitly by Nick Timothy, one of the chief authors of the 2017 manifesto, in a discussion with the British Interest magazine.55 To put this proposal into context, the Government had already sought to change ODA criteria through the OECD with some success. Patel’s predecessor Justine Greening had announced in 2016 that the OECD’s Development Assistance Committee had agreed to update the rules to include support for the military in fragile countries on issues that promote development and the recognition of tackling violent extremism as an official development activity (this is explored further in our analysis of ODA spending rules in Section V, see p.90 of this report).56 These updates were limited and the core principles of

Conservative and Unionist Party Manifesto, 2017 https://s3.eu-west-2.amazonaws.com/conservative-partymanifestos/Forward+Together+-+Our+Plan+for+a+Stronger+Britain+and+a+More+Prosperous....pdf 54 ‘Conservative manifesto 2017: Tories open door to changing definition of international aid’ The Independent, May 2017 https://www.independent.co.uk/news/uk/politics/conservative-manifesto-2017-international-aid-definition-7per-cent-target-general-election-foreign-a7742526.html 55 ‘Remaking the British nation: An interview with Nick Timothy’, British Interest, April 2020 https://britishinterest.org/remaking-the-british-nation-an-interview-with-nick-timothy/ 56 ‘Changes to official aid rules’ Gov.UK, February 2016 https://www.gov.uk/government/news/changes-toofficial-aid-rules The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

the ODA system remained unchanged. The 2017 manifesto was proposing to go further with more focus on UK aid’s relationship with strategic interests. The June 2017 general election returned a Conservative minority government, which limited the prospect of the manifesto being fully implemented. Theresa May remained as Prime Minister and Priti Patel continued as development secretary. Patel’s junior minister at DFID, Rory Stewart, was appointed to a joint role as a junior minister at the FCO. Alistair Burt, formerly a health minister, likewise took up joint positions as a junior minister in DFID and the FCO. In October 2017, Patel was asked by the International Development Committee whether sharing ministers between DFID and the FCO constituted a ‘creeping merger’ between the two departments. Patel replied that ‘DFID is a stand-alone, independent government department…[t]here has been no suggestion from my department or from the Government that that is going to change.’57 On 3 November 2017, the BBC broke the news that Priti Patel had attended meetings with Israeli political figures while on a ‘private holiday’ in Israel without disclosing them to the Foreign Office or the Prime Minister beforehand. It was also reported that Patel had raised the possibility of providing British aid money to hospitals run by the Israeli military in the Israeli-occupied Golan Heights region of Syria. In the wake of these reports, Patel was compelled to resign on 8 November, having served 16 months as development secretary. Perhaps the most significant foreign policy development that occurred during Patel’s period as Secretary of State was the first use of the term ‘Global Britain’ by Theresa May in her first speech as Prime Minister to the Conservative Party Conference in October 2016.58 The intention of Global Britain was to signal that the country would not be inward-looking after Brexit, but would instead adopt an outward looking agenda that went beyond Europe. This was developed further during Penny Mordaunt’s period as Secretary of State and continues to be a theme in Britain’s post-Brexit foreign policy.

57 58

International Development Committee, Oral evidence: DFID’s Priorities, HC 485, Q23 ‘Theresa May's Conservative Party Conference speech – key points analysed’, The Guardian, October 2016

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Penny Mordaunt (9 November 2017 – 1 May 2019) Compared to some of her predecessors, Penny Mordaunt’s time at DFID was brief. She did, however, make several interventions in the public debate around aid spending priorities, while also reiterating the need for aid to align with ‘the national interest’. Delivering her speech on the future of British aid after Brexit not from DFID but from the CDC, Mordaunt argued that the CDC stood for the same values she wanted to instil in DFID: the conjunction of ‘heart and mind’ and an ‘intertwining of compassion and capital’.59 As well as confirming that financial commitments between British NGOs and the European Union would be upheld even in the absence of a comprehensive UK-EU Brexit deal, Mordaunt used her speech to outline a ‘pragmatic’ approach that would mean a more coherent ODA spend, a greater role for the private sector, and a greater role for DFID in catalysing flows of private capital into aid projects. Mordaunt announced a new partnership between the City of London Corporation and DFID to design new finance mechanisms to mobilise more investment into Africa while also allowing the City to expand its role as a financing hub for the developing world. Mordaunt also pointed to the Green Growth Equity Fund as an example of DFID’s fresh approach, a UK investment vehicle in cooperation with the Government of India and the City of London, which would fund green infrastructure projects while also delivering a return to the UK. In January 2019, Mordaunt suggested that DFID move from being a ‘spending department to a fundraising department’, envisioning a greater role for DFID in persuading philanthropists, big banks and the general public to give more in private donations.60 The Global Fund to Fight HIV/AIDS, TB and malaria replenishment was part of this effort, with DFID committing to a dedicated private sector match fund.61 This approach has been carried through to the recent Gavi replenishment which contains a similar fund.

Speech by Penny Mordaunt MP at CDC, 9 October 2018 [Online transcript]. ‘Penny Mordaunt says aid spending target 'unsustainable' and DFID should raise more private cash’ – PoliticsHome, January 2019 https://www.politicshome.com/news/article/penny-mordaunt-says-aid-spending-target-unsustainable-and-dfidshould-raise-more-private-cash 61 Global Fund Praises UK for Increasing Pledge by 16 Percent, The Global Fund to Fight HIV/AIDS, TB and Malaria, June 2019 60

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Mordaunt also proposed changes to ODA rules, specifically that it could include the domestically re-invested profits of CDC, which do not count towards the 0.7 per cent figure. She pushed for more programmes to be funded in conjunction with other departments and advocated for a closer link between the aid budget and the Government’s national security strategy, expressing a desire for more alignment between defence, counter-terrorism and aid spending. Sources close to Mordaunt insisted her ideas were simply new ways of thinking about funding, representatives in the development community criticised the proposals for bringing ‘uncertainty for the world’s poorest’ and that they would undermine the 0.7 per cent target.62 Mordaunt’s tenure as development secretary also coincided with Theresa May’s draft EU withdrawal agreement and political declaration, put forward in November 2018. The draft agreement gestured towards continuing cooperation and promised to ‘establish a dialogue to enable strategies in the programming and delivery of development that are mutually reinforcing’. Rory Stewart (1 May – 24 July 2019) and Alok Sharma (24 July 2019 – 13 February 2020) Rory Stewart became DFID’s fourth secretary of state in three years when he replaced Mordaunt, who was moved to the Ministry of Defence in May 2019. He had in the past been a joint minister across DFID and the FCO and before entering politics had worked as a diplomat in Afghanistan. Perhaps as a result of this professional experience, Stewart supported stronger coordination between aid and defence operations. He also supported the continuation of Britain’s commitment to the 0.7 per cent target. After less than three months in post, Stewart returned to the backbenches when Boris Johnson won the Conservative leadership contest and became Prime Minister. Johnson’s https://www.theglobalfund.org/en/news/2019-06-29-global-fund-praises-uk-for-increasing-pledge-by-16-percent/ 62 ‘Penny Mordaunt criticised over call for aid to come from private sector’ The Guardian, January 2019 https://www.theguardian.com/global-development/2019/jan/30/penny-mordaunt-criticised-over-call-for-aid-tocome-from-private-sector

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Cabinet reshuffle in July 2019 was the largest in British post-war history – with 11 dismissals and six resignations. Stewart’s replacement at DFID was Alok Sharma, who had been a minister at the FCO when Johnson was foreign secretary and was an early supporter of Johnson’s leadership bid.63 Although Sharma’s time at DFID was also relatively short, he did seek to allay concerns that the aid budget could be cut by the new administration, with Johnson having mused in an interview with the Financial Times that the UK ‘could not continue to spend aid as if it were a Scandinavian NGO’. Appearing before the International Development Select Committee in October 2019, Sharma affirmed his and Johnson’s support for the 0.7 per cent spending commitment and also stated his belief that DFID should remain a separate government entity and not merge with the FCO, something else that Johnson had suggested previously.64 Sharma also outlined his departmental priorities to the Committee, identifying climate change, economic development, girls’ education and women’s reproductive health and rights as key programmes. This was consistent with Sharma’s comments at the World Bank Group in Washington, where he stated that the UK’s contribution to the replenishment of the Bank’s International Development Association (IDA) would be contingent on global institutional reform to refocus funding on climate change and gender equality (Elliott 2019). Additionally, he called for a focus on mobilising private sector investment for the poorest countries, a philosophy supported most prominently by his predecessor-but-one, Penny Mordaunt. Sharma’s time as development secretary coincided with the December 2019 general election, in which the Conservative Party manifesto included a pledge to maintain the commitment to spend 0.7 per cent of GNI on development.65 The party won a majority of 80, ending the legislative stasis that had gripped Parliament since the 2017 election. The UK’s exit from the EU then followed on 31 January 2020. With a solid parliamentary 63

‘Alok Sharma: Why I am voting for Johnson’ Conservative Home, May 2019 https://www.conservativehome.com/platform/2019/05/alok-sharma-why-i-am-voting-for-johnson.html 64 ‘Sharma vows to protect aid budget and rules out talk of merger with Foreign Office’, The Telegraph, October 2019 https://www.telegraph.co.uk/global-health/climate-and-people/sharma-vows-protect-aid-budget-rules-talkmerger-foreign-office/ 65 Conservative Party Manifesto 2019 https://assets-global.websitefiles.com/5da42e2cae7ebd3f8bde353c/5dda924905da587992a064ba_Conservative%202019%20Manifesto.pdf The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

majority and the UK entering a new era outside of the EU, Johnson carried out a second ministerial reshuffle in February 2020 in which Sharma was promoted to business secretary and Anne-Marie Trevelyan became the new international development secretary. Anne-Marie Trevelyan (13 February – 2 September 2020) Trevelyan’s appointment came as a surprise to some as it had been anticipated that Johnson may have used the reshuffle as an opportunity to merge DFID with the FCO (Merrick 2020). Although DFID retained its own secretary of state in the reshuffle, groundwork for a merger followed swiftly. In making his junior ministerial appointments, Johnson created seven ministerial posts with portfolios jointly in the FCO and DFID. For the first time in its history, FCO now shared its entire ministerial team with DFID, although the departments retained separate permanent secretaries and bureaucratic staff.66 Yet within a month, Matthew Rycroft, DFID’s permanent secretary since 2018, was moved to fill a vacancy at the Home Office, with no permanent replacement earmarked to succeed him.67 Reports also emerged that DFID country directors were being instructed to report to FCO ambassadors and high commissioners, rather than to DFID’s UK headquarters (Worley 2020a). These developments caused alarm amongst aid professionals, with a former senior DFID official calling the joint ministerial team ‘integration by stealth’ and NGOs speculating that DFID’s independence was at risk (Worley 2020b). These moves served as a precursor to the decision of a formal departmental merger, which Johnson announced in the House of Commons on 16 June 2020. In his statement, he explicitly framed current aid spending as out-of-step with the UK’s security interests, and justified the reform as one that would maximise British influence, with a newly joined-up department better able to deliver a cohesive foreign policy agenda (BBC 2020a). Despite Johnson’s insistence that the UK would still spend 0.7 per cent of GNI on aid, the announcement attracted cross-party criticism, with detractors including former development secretaries Andrew Mitchell and Rory Stewart, former prime ministers Tony Blair, Gordon Brown and David Cameron, as well as Labour leader Keir Starmer, who 66

The FCO had previously only shared some of its ministers with DFID during Theresa May’s ministry. ‘DFID chief Matthew Rycroft named Home Office perm sec’ Civil Service World, March 2020 https://www.civilserviceworld.com/professions/article/dfid-chief-matthew-rycroft-named-home-office-perm-sec 67

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pledged to re-establish DFID if the next election were to return a Labour government. UKbased aid charities also expressed their anger and disappointment. Mark Sheard, the CEO of World Vision UK, said the announcement was ‘shocking evidence of the UK putting its own economic interests above saving lives’ and risked diverting money ‘to address UK foreign policy interests rather than alleviating poverty’, whilst Patrick Watt, the director of policy at Christian Aid, called the merger ‘an act of political vandalism’ (Ford 2020). Further criticism came in the context of the COVID-19 pandemic. Stephanie Draper, the CEO of Bond, highlighted this in her response to the merger, saying that ‘scrapping DFID now puts the international response to COVID-19 in jeopardy’ and leaves the aid budget ‘in the hands of those with little expertise in global health systems, humanitarian response and disease prevention and eradication’ (Ford 2020). Defending the Government, Trevelyan upheld that combining diplomacy and development would improve the UK’s aid response, saying that the UK’s understanding of ‘national interest’ included a commitment to values as much as it includes security, and cited the UK-hosted global vaccine summit as an example of how targeted diplomacy can result in positive outcomes for development funding and collaboration on global health (Trevelyan 2020).

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IV: Was DFID a success? On 2 September 2020, the Foreign, Commonwealth and Development Office (FCDO) was formally inaugurated, bringing DFID’s 23 years as an independent development department to a close. The post of Secretary of State for International Development was abolished, meaning that for the first time since John Major’s government, there would be no dedicated voice for international development in the cabinet. The establishment of DFID marked the end point of an 80-year trend in UK development policy towards a singular focus on poverty alleviation. Having traced that trend in parts I-III of this report, part IV considers whether DFID was a success from several different perspectives: international leadership, soft power, stewardship of public funds, influence in Whitehall, and alignment with the national interest. International leadership At the time of the merger, the UK was an outlier among OECD countries: DFID was the only standalone government department devoted to international development and benefiting from its own Cabinet-level political leadership. When the Prime Minister announced the merger, he drew attention to this unique status by highlighting that the UK would be ‘following the examples of Australia, Canada and New Zealand, all of whom run their development programmes from their foreign ministries.’68 Since 2009, all three countries have merged aid departments, which enjoyed varying degrees of autonomy, into their respective Ministries of Foreign Affairs. For some critics of DFID, its outlier status was symbolic of its obsolescence: its commitment to eradicating poverty emblematic of being out of touch with the dangers of the modern world (Prins 2020). For proponents, DFID’s standalone status as a politically and financially powerful government department was exactly what made it a success. Almost uniquely among Western governments, when

Prime Minister’s Statement to the House of Commons: 16 June 2020, Gov.uk https://www.gov.uk/government/speeches/prime-ministers-statement-to-the-house-of-commons-16-june-2020 The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

DFID committed to a course of action, its partners knew that the department had both the resources and the political authority to follow-through on its commitments. DFID developed a strong record of leadership on the international stage, especially in global public health. Successive DFID Secretaries of State have shaped the global agenda around their particular interests. One relevant example is malaria, which since being prioritised in the 2010 Conservative manifesto has seen enormous progress, largely driven by DFID. Between 2010 and 2018, deaths from malaria, the majority of which are in young children, fell by a third.69 Progress against polio, another disease that affects children and was a DFID priority, has seen the number of countries with wild poliovirus transmission falling from 21 to just 2.70 DFID led the world on global health research and development, contributing to the first new drugs in 40 years against tuberculosis (TB), the world’s leading infectious killer. It played a pivotal role in shifting the policies of major multilaterals, such as the Global Fund to Fight HIV/AIDS, TB and Malaria and Gavi, the Vaccine Alliance, to focus more spending on the poorest countries. It helped build a global coalition against antimicrobial resistance (AMR), resulting in a global accord at the UN General Assembly, a first for a health issue with barely any civil society or dedicated institutional actors. Beyond the global health arena, DFID was at the forefront of the movement that placed women and girls at the heart of global development. It also contributed to the wider UK government effort to mobilise the G8 around debt relief for some of the world’s poorest countries as part of the UK’s presidency in 2005. DFID also helped to reshape the fundamental architecture of development spending. Under Clare Short, the department drove an approach to development built on partnership, recipient country ownership, and support of shared development targets like the Millennium Development Goals. These were taken forward by Hilary Benn through the 2005 Paris Declaration on Aid Effectiveness that brought more than 100 signatories into a common framework on effectiveness. Benn also founded the International Aid Transparency Initiative (IATI), which established standards of transparency around development spending which 69

World Malaria Report 2019, World Health Organisation, December 2019 https://www.who.int/publications/i/item/9789241565721 70 Tracking Progress Toward Global Polio Eradication, 2010–2011, Centres for Disease Control, April 2020 https://www.cdc.gov/mmwr/preview/mmwrhtml/mm6115a4.htm

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have been adopted by a number of major players in global development. The Coalition government created DevTracker, another step forward in the transparency and detail of DFID’s spending, inspiring similar data libraries operated by agencies like the Global Fund. These successes contributed to the belief amongst DFID’s supporters that the department was an embodiment of ‘a compassionate, outward-facing nation on the world stage: a “global Britain”.’71 Could the UK have played a similar, or even enhanced, role in each of these movements with a shared foreign and development ministry? The Prime Minister appeared to intimate that he thought it could. When the merger was announced he argued that ‘…distinctions between diplomacy and overseas development are artificial and outdated’ (Johnson 2020). In the authors’ view, few other countries could claim to rival the UK’s leadership in international development policy over the last two decades. The fact that the UK was unusual in having an independent development department suggests that DFID’s independence did play a role. Soft power DFID’s supporters argue that its independent leadership and focus on poverty eradication, backed by the financial and moral clout of the 2015 ODA Target Act, are key elements of the UK’s soft power without which the UK’s global influence would be diminished.72 It is, however, hard to define or measure soft power and therefore hard to argue empirically that DFID did or did not contribute to the UK’s soft power and to what extent. The House of Lords Select Committee on Soft Power and the UK’s Influence explored the issue in a 2014 report. The Committee stated that ‘the promotion of British values through the funding of international development projects can yield significant soft power gains.’73 Giving evidence for the report, the Brazilian Ambassador to the UK said that ‘the policy that 71

‘DFID must be at the heart of global Britain’ Bond, January 2020 https://www.bond.org.uk/news/2020/01/dfid-must-be-at-the-heart-of-global-britain 72 Statement: With the abolition of DFID, Global Britain has shrunk, World Vision, June 2020 https://www.worldvision.org.uk/news-and-views/latest-news/2020-news/june/statement-abolition-dfid-globalbritain-has-shrunk/ 73 ‘Persuasion and Power in the Modern World’, House of Lords Select Committee on Soft Power and the UK’s Influence, 2014 https://publications.parliament.uk/pa/ld201314/ldselect/ldsoftpower/150/15008.htm#a18 The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

is being followed of increasing official development aid obviously generates positive reverberations’. Lord Hannay of Chiswick, a former UK Permanent Representative to the UN, added that the scale of the aid budget itself, specifically the commitment to spend 0.7 per cent of GNI on ODA, made ‘both an indirect and a direct contribution to Britain's soft power.’ It should be noted, however, that the contributor to Britain’s soft power in each of these instances was the scale of the UK’s development assistance, not the means through which it was administered. The Soft Power 30 Index by Portland has gone further in drawing attention to DFID’s role in UK soft power. Its 2019 report, acknowledging speculation that DFID may be merged with the Foreign Office, warned that the loss of DFID would ‘likely represent a setback in the UK’s international development capacity, but also send a signal that the UK cares less about global development than it once did’, concluding that ‘the resulting impact on Britain’s soft power is unlikely to be positive’ (McClory 2019). The report went on to highlight the impact of potential structural changes as a contributing factor in the UK’s fall in the index despite being among the top ODA donors. This would imply that the soft power benefits of DFID were as much about capacity and the expertise to spend development assistance well as the level of spending. Such a view was supported by the Committee, with their report concluding that ‘where development assistance is effective, conditions in the recipient countries improve at the same time as the UK’s reputation, as the aid giver, increases.’ Again, however, there is nothing to say that the FCDO will be less effective at delivering high quality development assistance than DFID was. DFID was merged, rather than closed; its employees and their expertise now work for the FCDO. Evidence from other mergers (see Section V) suggests that a mishandled merger may result in a loss of talent and expertise, but such a situation can be avoided. A greater risk to the efficacy of development programme may be what the development budget is intended to do, rather than who is administering it.

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Stewardship of public funds In his announcement of the DFID/FCO merger, the Prime Minister stated that there would be ‘a single UK strategy for each country, overseen by the National Security Council’ (Johnson 2020) drawing together development, diplomatic, and trade objectives. DFID was created to avoid that very scenario. Coming on the back of the Pergau Dam Affair and the direct use of the development budget to further the commercial and diplomatic interests of the then government, DFID’s first Secretary of State, Clare Short, was committed to ensuring that the UK’s development spending was solely focused on poverty alleviation. She even decided to hand back some of the newly founded department’s budget to keep DFID’s programming ring-fenced from the UK’s foreign policy objectives (Ireton 2013, p. 51). As of September 2020, the majority of UK development assistance was administered through DFID. The most recent statistics showing DFID’s share of the total aid budget at 73.2 per cent (DFID 2020). The rest was spent by a range of government departments including the FCO, BEIS, and even the Home Office. In a report examining the Definition and administration of ODA, the IDC highlighted its concerns that ‘ODA programmes administered by other government departments are not always targeted adequately towards poverty reduction and some existing departmental activities, with only marginal poverty reduction purposes, are being badged as ODA’; and that projects with a dual purpose mixing poverty reduction with a ‘national interest objective, such as increasing trade or protecting national security’ (IDC 2018). The dual-purpose projects in question are the Prosperity Fund and the CSSF. The Prosperity Fund aims to create opportunities for UK businesses alongside efforts to reduce poverty and is administered by the FCO. It runs projects in a range of middle-income countries, including China, and the IDC found that some of the projects it supported included efforts ‘to develop the Chinese film industry, improve the Chinese museum infrastructure, and improve the credit bond rating system in China’ (IDC 2018). The IDC agreed with FCO arguments that some aid should be spent in middle-income countries but said that the rationale for doing so was to reach the poorest people and recommended a

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wholesale reorientation of its programming. The Conflict, Stability and Security Fund (CSSF) received even harsher criticism: the IDC felt that the CSSF’s theory of change was weak and suggested reviewing its continued existence. Overall, the Committee argued that dual purpose funds are an inefficient and ineffective way of achieving development or secondary objectives, stating that: ‘ODA must be directed primarily at reducing poverty, helping the very poorest and most vulnerable rather than being used as a slush fund to pay for developing the UK’s diplomatic, trade or national security interests’ (IDC 2018). The IDC was not the only watchdog to target criticism at projects without a primary focus on poverty alleviation. In June 2018, ICAI reported that other government departments were more likely to spend aid money ineffectively that DFID, focusing as they did on middleincome countries or on projects which did not have poverty alleviation as their primary focus.74 It is ironic that one of the criticisms of aid, which were synonymous with criticisms of DFID, was that UK aid was being spent in China and other countries with space programmes. Aid money was being spent in China, but primarily through projects managed by the FCO and not DFID. If DFID was such an effective steward of the aid budget compared to other departments, why did it lose control of nearly 30 per cent of it? Part of the reason was the scale of the aid budget itself. From 2010, whilst other government departments fought to maintain their budgets, DFID’s budget rose steadily and hit the long-standing GNI target in 2013. Just as austerity was biting, and budgets such as the police were being cut by 20 per cent, DFID’s budget reached an all-time high. Increasing the aid budget whilst the country, and the world, was still emerging from the financial crisis was a hugely powerful move internationally. But alongside the increasing overall budget came limited means for spending it. DFID, like other Whitehall departments, was placed under a headcount cap. The department relied more heavily on consultants and saw a comparative decline in its project management capabilities. In 2014, International Alert, a humanitarian relief NGO, argued that efforts to generate extra efficiencies could backfire: ‘diligence and care are not best served by understaffed government departments, which suggests that DFID's drive to reduce transaction costs and

74 The use of UK aid to enhance mutual prosperity, Independent Commission on Aid Impact, 2019 https://icai.independent.gov.uk/report/mutual-prosperity/

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the FCO's drive to 'do more with less' may be counter-productive.’75 The concerns were proven to be well-founded. One such potentially ‘counter-productive’ move was the decision by DFID to channel more money into multilateral institutions which required less intensive management. Multilaterals have long been a target for the press. The Daily Mail ran a story in 2014 which serves as a good example. Headlined ‘Fury over the £3bn Britain spends on foreign aid to groups who waste it’, the piece highlighted ‘waste’ by multilateral agencies, using as evidence results given to multilaterals by DFID itself during its own multilateral aid review which it subsequently published. DFID’s commitment to transparency served to give its critics plenty of ammunition, and a broader narrative emerged that multilaterals, and particularly the UN, represented poor value for money. Value for money is subjective, but there can be no doubt that the UN’s bureaucracy is expensive, cumbersome, and mired in an endless cycle of reforms. Salary and benefits for junior staff, for example, are higher than would be found in most non-governmental organisations working on equivalent issues.76, 77 As a result, managers try to avoid giving staff permanent contracts until they have no other choice in order to keep the permanent headcount costs low. This creates a two-tier system: between permanent staff who are well-paid, have highly generous benefits and effectively cannot be moved on, and temporary staff who are also well-paid but benefit from far fewer employment protections and therefore more susceptible to bullying, harassment, or the kinds of behaviours that make headline news and further undermine the public’s faith in the multilateral systems.78, 79 Nonetheless, for all its flaws, the multilateral system is a source of genuine UK influence. The scale of the UK development budget has meant that the UK is represented at the board-level of many UN organisations, both great and small. Whilst some argue that China

International Alert supplementary written evidence to the House of Lords Select Committee on Soft Power and the UK’s Influence. 76 UN Careers, Pay and Benefits https://careers.un.org/lbw/home.aspx?viewtype=sal 77 Charity Sector Salary Report 2019, Harris Hill, Charity Job 78 Is the UN Violating International Labour Standards, Maria Cecillia Herrera, October 2019, https://www.ejiltalk.org/is-the-un-violating-international-labour-standards/ 79 The United Nations: More Consultants, Fewer Rights, Edward Girardet, 2014, https://lenews.ch/2014/11/20/the-united-nations-more-consultants-fewer-rights/ The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

has disproportionate influence over the UN system, if there is a country that punches above its weight at the UN, it is the UK. With the probable return of the United States to a position of leadership in the multilateral system, the UK should be similarly on the front foot and committed to reinforcing a system from which it has greatly benefited in its attempts to shape the international development agenda (see above). In particular, the UK could press hard for consistent improvements in governance and transparency at UN and UN-affiliated organisations, including the imposition of term limits, non-executive directors (where possible), and further and accelerated reform of budgets and internal operations (see Recommendation 8). Withdrawing from multilaterals, rather than reforming them, would only weaken UK influence. Whilst the rising aid budget may have enhanced UK soft power and influence abroad, at home it was a target for a critical press. There have been countless headlines over the last decade of individual projects that seem ineffective or poorly considered. In April 2017, for example, the Daily Express ran a piece carrying the headline: ‘The UK Foreign aid budget is being ‘squandered’ on stop-smoking schemes’ which focused on a £15 million contribution to the World Health Organisation’s work to tackle tobacco use, a major driver of mortality in much of the world. The Daily Mail has run articles disapproving of the increased spending in ‘trendy schemes’ focusing on climate change rather than more traditional types of aid such as malaria bednets. In October 2018, The Sun carried the headline: ‘Fury as £4bn for foreign aid budget goes to fixing potholes abroad.’ So, was DFID an effective steward of UK public money? Clearly, there are aspects of waste in some UK-funded development projects. However, DFID was one of the most transparent aid agencies in the world, and certainly the most transparent and effective dispenser of the UK development budget compared to the other government departments who had access to it. In 2015, HM Treasury and DFID agreed that 30 per cent of UK aid would be spent by departments other than DFID, but by 2020 all departments spending UK aid would have to be rated ‘good’ or ‘very good’ on Publish What You Fund’s aid

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transparency index. The 2020 index rated the FCO as ‘fair’ compared to DFID’s ‘very good’, with the FCO only ranking 38th of 47 ODA-spending agencies.80 Furthermore, the DFID budget was rigorously scrutinised by multiple independent or crossparty groups, perhaps more so than any other government budget. DFID specifically focused on those poorest countries where research has suggested aid had the most impact but they are also some of the most difficult to operate in. Waste is inevitable when projects operate in some of the most complex and difficult environments in the world, but there is little credibility in the argument that even a small minority of the UK’s development projects are wasteful. There certainly were projects that were less effective than they could have been. DFID’s projects on the whole, however, aligned with the department’s stated strategic objectives and, using those same objectives as the yardstick, several independent accountability bodies consistently found that the department’s programmes returned good value for money for UK taxpayers. There are other aspects of DFID’s spending, however, where criticism is more warranted. Influence within UK government policy Prins (2020) argued that government departments are departments ‘of’ whereas campaigning agencies are ‘for’ things, and that DFID’s focus on cheerleading for international development warped government policy. DFID was designed to influence government policy and, like the focus on poverty alleviation, this was the output of a long-lasting policy trend. Critics argue that DFID’s successes in influencing UK government policy went too far. The difference in financial firepower between the FCO and DFID, as well as their competing objectives, has led one of the leading critics of UK development policy, Ian Birrell, to argue that it was DFID not the FCO that was dictating foreign policy in sub-Saharan Africa, as mentioned in section III of this report (Birrell 2009). Even supporters of DFID have argued that it has been ‘too close to dictators’ (Bloomfield 2020). The House of Lords Select Committee on Soft Power and the UK’s Influence agreed that there was a problem and recommended that ‘DFID should give consideration to the degree to which its work can 80

Publish What You Fund, Transparency Index, 2020 https://www.publishwhatyoufund.org/the-index/2020/ The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

support the promotion of British values. It should do so both because such a focus would support the UK's soft power, and because British values such as democracy and the rule of law promote the stability of the countries involved and the wellbeing of their people’.81 But what if, because of the international relevance of a given issue, DFID was forced to engage with a government that has poor governance, high levels of corruption, or has violated human rights? Polio, for example, is now almost exclusively found in Pakistan and Afghanistan, but the UK (or any other) government could hardly simply decide not to support efforts to eliminate the disease because of the human rights, governance, or corruption records of those countries. Withdrawal could risk a resurgence of polio which could threaten children around the world. These cases, however, are relatively few and should not be taken as a defence of engaging with dictators or with governments who do not share core British values. Whilst it is true that if you are going to engage in some of the biggest development challenges, you may have to operate in some countries and work with some governments who do not share your ideals, there are a relatively limited range of issues that are truly global threats – polio and antimicrobial resistance (AMR) being among them. A significant range of development activities are not tied to matters of global health security, or any other kind of security, and whilst withdrawal may be detrimental to the citizens of the country concerned, it could be justified. DFID, however, does not often withdraw from countries on the basis of human rights or governance. As DFID’s budget grew, it tied itself to a ‘payment by results’ or ‘results agenda’ which takes the urgency of tackling a global health threat and applies it to a wider range of programming. As DFID project managers are required to make the case for their project by impact estimates against which they are then evaluated, and achieving those estimates relies to a considerable extent on a positive working relationship with the government concerned, any disruption to that relationship risks disrupting the programme and opening the department up to criticism of the project. DFID’s commitment to results

House of Lords Committee on Soft Power and the UK’s Influence, Persuasion and Power in the Modern World The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

and transparency around whether those results are achieved or not, therefore, became something of a rod for its own back (see the section above regarding multilaterals). That is not to say that the results agenda should be dismissed. The concern is that an overly strong focus on results risks development outcomes being the sole driver of delicate decisions around how to respond to governments who do not meet British values of democracy, commitment to human rights, good governance, and an absence of corruption. The balance has, on occasion, shifted too far in the direction of development and should move back towards the defence of British values which are critically undermined when the UK gives taxpayer money to support governments who abuse their own citizens. One approach would be to continue another of Mitchell’s reforms and further limit the range of countries with which the UK government has bilateral aid relationships. That does not mean that the overall level of aid should be reduced – though it could be – but that it should be refocused in countries where governments demonstrate a consistent respect for human rights, good governance, and a commitment to democracy. If aid works, and the evidence suggests it does, such a move would see an increase in the standard of living for people in those countries, and arguably over time that could encourage more countries to follow a similar path. It would also reduce the likelihood of British taxpayer money going to support governments with questionable rights records. However, such shift would carry consequences. Those countries who are not considered to be demonstrating regard for these British values would see a steady reduction in British bilateral funding. This might leave space for other countries with fewer scruples to expand their engagement. It might also result in negative consequences for the citizens of that country who might be reliant on British aid spending for basic services. These consequences would be profound and real. However, a continued weakening of the mandate for aid spending in the UK may threaten these programmes in the future anyway. Less of an impact would be felt from a careful, considered withdrawal than an abrupt departure forced by politics or a precipitous budget cut. Further, refocusing the bilateral aid budget would not mean a complete lack of British influence in countries that didn’t meet UK standards of human rights and governance. The UK continues to support multilaterals who

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have robust anti-corruption protections and can provide support to people in countries where Britain may not wish to give directly. Alignment with the national interest At the heart of the decision to merge DFID and the FCO was a view that the development budget could be spent more effectively in the national interest without the ‘dividing line between aid and foreign policy’, as the Prime Minister described it in his statement on the merger (Johnson 2020). It is worth noting that the Prime Minister did not say that DFID’s current spending was not in the national interest, but rather that there wasn’t enough oversight to check that it was. An approach to development focused on what the UK ‘gets’ from its spending marks a return to pre-DFID days. Clare Short’s approach to DFID was to keep it focused solely on poverty alleviation. She eschewed a transactional view of the national interest, where development could support commercial or diplomatic aims, in favour of a soft-power view of the national interest, that the UK government’s altruism was the right thing to do and in its own interests. Subsequent Secretaries of State felt differently. The shift began in DFID’s 2005 policy paper ‘Fighting poverty to build a safer world’. The paper attempted to align development policy more closely with reconstruction attempts after the wars in Afghanistan and Iraq, which had resulted in Short’s resignation as Secretary of State. The paper outlined that ‘[p]overty, underdevelopment and fragile states create fertile conditions for conflict and emergence of new security threats, including international crime and terrorism.’ Later, under Andrew Mitchell’s leadership of DFID, this developed into an argument that security in the UK was provided by ‘training policy in Afghanistan ... and getting girls into school in the Horn of Africa.’ Similarly, aid proponents have argued that development funding could help stem migration, though many commentators pointed out that the picture was nuanced, and that aid alone would not stop the flow (Abrahams 2017).82 Nonetheless, the argument that DFID’s work was in the national interest has

Data analysis: Aid money alone will not be enough to stop the causes of migration, DW, February 2018 https://www.dw.com/en/data-analysis-aid-money-alone-will-not-be-enough-to-stop-the-causes-of-migration/a42603121

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struggled to gain traction, whether with the public or within the Conservative Party. There are three reasons why the national interest argument fails. First, the timetable of development interventions is slow. Educating girls in the Horn of Africa may well lay the foundations for peace and prosperity, but the benefits will be felt far in the future, and the threat of Al Shabaab and piracy in the Gulf of Aden is very present. The benefits are too delayed to resonate with the broader public. Second, by presenting development as in the British national interest, it creates an opposition between development spending and all other government spending which is also in the national interest. Even for interventions which have an immediate impact – for example malaria bed net distribution in West Africa – the impact is much more remote than spending an equivalent sum of money on local health services in the UK. Investing money for the benefit of people the other side of the world is, for a decent proportion of the British public, much less in the national interest than properly funding the NHS. Third, what is the national interest, and who determines it? Under Labour and particularly Clare Short, development served the national interest by representing values of solidarity and compassion. Under the Coalition and later Conservative governments, the national interest argument turned into a long-term economic argument (development takes time but yields results) and a short-term moral argument (if you see a problem and you can help, you should) and has now reached the point that the current Government believes that a development ministry solely focused on alleviating poverty is not truly in the national interest, and hence is remaking the UK’s development infrastructure to suit its purposes. As DFID failed to find arguments that moved the public in support of development, a disconnect emerged between public and political support for development spending. The achievement of the 0.7 per cent target and its enshrining in law was a significant moment. No other G7 country had achieved the longstanding target, and for a period the UK was the second biggest donor in the world in absolute terms behind the United States. The level of development spending, however, did not enjoy broad popularity. Mass mobilisation campaigns, such as the ‘IF Campaign’, fell flat, failing to spark the public’s imagination. DFID’s leaders made arguments about the national interest that didn’t resonate with the public, and highlighted waste within their own department. Even efficiency drives such as The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

payment by results produced some perverse incentives. Theresa May took DFID off the Downing Street communications grid, and her successor was the first Prime Minister since John Major to have served as Foreign Secretary. The idea of DFID hadn’t been popular with the FCO since it was founded, and following cuts to the FCO under the Coalition government, Foreign Secretaries were always likely to look with envy at DFID’s budget. The merger is not a remedy for cuts to the UK’s diplomatic services, but it is unsurprising that a former Foreign Secretary would feel that the national interest would be best served by subsuming DFID into the FCO. Ultimately, what constitutes the national interest is, of course, subjective. DFID was founded with the view that development spending with an unequivocal focus on eliminating poverty was more in the national interest than development spending aligned with commercial or diplomatic interests. There is no merit to the argument that consecutive governments and DFID Secretaries of State were spending significant sums of taxpayer money not with their definition of the national interest in mind. There is, however, merit to the argument that British politics has changed, and that a new definition of the national interest is being forged. The Integrated Review of Security, Defence, Development and Foreign Policy goes some way to outlining that definition, with its focus on linking national security and diplomatic strategy with promoting democracy and human rights. How successful was DFID? There is, of course, a final way of judging whether DFID was a success, and that is whether DFID met its own objectives. In the last five years, DFID estimates that it helped: ● 69m people access financial services, ● educate 15m children in fragile states, ● install 770 megawatts of clean energy, ● 25m women and girls access modern family planning, ● 34m people access emergency humanitarian aid, ● immunise 74m children against preventable diseases saving 1.4m lives, ● 166m people receive some form of care for neglected tropical diseases, and

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● support 55m people through nutritional interventions.83 This impact is considerable, but is it enough to make DFID a success? Much depends on the measure. It was an effective and efficient steward of government resources, delivering programmes in keeping with a political paradigm that stated that poverty alleviation was in the national interest. It enhanced Britain’s soft power, though perhaps its impact was enhanced more by the size of its budget than by DFID itself, and helped shape the global development agenda, both thematically and administratively. On the other hand, its pursuit of results at the expense of everything else saw British values sacrificed for good relationships, and it struggled to shape a narrative that an aid budget focused solely and exclusively on alleviating poverty was truly in the national interest. Ultimately, this last point resulted in its dissolution: paradoxically the Department for International Development ceased to exist because it, and its allies, lost the argument for international development.

83 DFID results estimates: 2015 to 2020, DFID, August 2020, https://www.gov.uk/government/publications/dfidresults-estimates-2015-to-2020

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V: Global Britain “The shifting global context, a new relationship with Europe, and the need to deliver more with finite resources, requires us to evolve and enhance how we achieve our goals. We need to use government assets more cohesively and efficiently to maintain our global standing. Global Britain is about reinvesting in our relationships, championing the rules-based international order and demonstrating that the UK is open, outward-looking and confident on the world stage” – GOV.UK (December 2020). The discourse leading up to the announcement of DFID’s merger with the Foreign Office was primarily divided between those arguing that UK aid, having faced accusations that some projects were wasteful and/or ran counter to wider foreign policy interests, should be integrated and used more in line with British diplomatic strategies under a unified ‘Global Britain’ agenda; and those arguing that an independent DFID, respected worldwide for its transparency and its focus on addressing long-term development goals divorced from commercial interests, could command far more soft power and operate more effectively as a separate department with its own political leadership rather than as an agency within another. Proponents for the merger argued that there would be efficiencies in directly linking foreign policy and foreign aid. Garvan Walshe (2019) – a former international security adviser to the Conservative Party – argued that it would help to reorient British foreign policy towards an ‘enlightened national interest’ in which contributing to the provision of international public goods, which includes development assistance, forms a key part of UK security strategy to mitigate against threats like an aggressive China and emboldened Russia. James Rogers (2019) also noted that the integration of development policy with security policy could see a redirection of development assistance from countries which ‘received more than £500 million in British aid’ between 2015-17 despite ‘ballooning military budgets and active space programmes,’ towards supporting ‘British partners that are under attack, such as Iraq, Ukraine and Vietnam.’ Other critics have gone further and called for a reconsideration of the 0.7 per cent spending commitment, something neither Walshe nor Rogers suggested as being necessary in any reorganisation. Nick Timothy, the former chief The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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of staff to Theresa May, said development spending should come down in a merged department to allow for increased spending on ‘international capabilities’ such as ‘defence and diplomacy’ (Rogers 2020). In his announcement of the merger, the Prime Minister spoke of a change of geographic areas of interest, with a focus on countries like Ukraine and areas like the Western Balkans at the expense of traditional aid recipients such as Zambia and Tanzania (Johnson – November 2020). The merger, he stated, would shore up ‘European security’ in Ukraine and guard against ‘Russian meddling’ in the Western Balkans. The implication of these arguments is that current recipients can be judged either on their national government’s expenditures, rendering them less deserving or needing of assistance, or their strategic importance to Britain. These arguments are predicated on the notion that foreign assistance is a zero-sum game where the “deservedness” of the recipient should be determined less by globally recognised development metrics, and more by allegiance to the UK and furthering of greater British foreign strategy. There is not much of an indication that a key consideration should be where the aid budget can provide the most benefit for the prospective recipients. Of course, DFID does not have a monopoly on the ODA budget and aid spending has increasingly been allocated to projects in other departments. ODA, for example, is already being spent on the UK’s diplomatic network through a form of spending called ‘Frontline Diplomatic Activity’ (FDA) which allows for costs associated with diplomatic staff whose work is wholly or partially aid oriented to development to count as ODA. This provision is already used widely by the FCO, representing around 10 per cent of the FCO budget premerger (IDC 2018). As noted in the previous section, it is also already being spent with trade and defence objectives in mind, and these projects have been heavily criticised. The IDC and some NGOs contend that these projects constitute a misspending of ODA, which should be used exclusively for poverty alleviation. An alternative, more compelling, criticism is that these projects are ineffective at achieving either their primary or secondary objectives and therefore constitute a poor use of taxpayer’s money. Proponents would argue that these projects achieve more for the national interest – or at least their definition thereof – than pure poverty alleviation projects would have done, and as departmental budgets were tight and the ODA budget was generously apportioned and The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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enshrined in UK law, that meant the only way to fund these projects was through ODA. This, however, is an issue of budget distribution and the 2015 ODA Target Act, not departmental structures or aid strategy, and should not be considered a justification for a merger. With the possible repeal of the 2015 ODA Target Act any such justification supporting dual-purpose projects that are ‘neither fish nor foul’ (Mawdsley 2018) would end, and given the patchy record of other departments’ spending of ODA, the Foreign Secretary’s decision to bring all development spending under the FCDO is welcome.84 (See Recommendation 2). That is not to say that the merger may not bring benefits, just not those that Timothy and others have suggested. The merger alone does not allow more spending on perceived foreign policy priorities such as ‘defence and diplomacy’. That was already allowed, and already judged to be inefficient. By contrast, the merger may make the creation of projects that align development objectives with other projects that have diplomatic, trade or defence objectives easier from an administrative standpoint, as will be noted below. Ultimately, though, arguments that the aid budget should be used for objectives that are not poverty alleviation fail for a simpler reason: if the funds are not spent in pursuit of poverty alleviation, then they’re not part of the aid budget and shouldn’t be labelled as such. What is ODA? Two major pieces of UK legislation continue to govern the provision of UK aid: the International Development Act 2002, which defines development assistance as assistance for the purpose of sustainable development or welfare that is likely to contribute to poverty reduction, as well as humanitarian assistance; and the International Development (Official Development Assistance Target) Act 2015, which enshrines the 0.7 per cent commitment into law and compels the Government to continue to meet this target for every year subsequent to 2015. Additionally, the Explanatory Note to the Official Development Assistance Target Act 2015 explains that official development assistance is commonly accepted to have ‘the meaning given to that term by the Development Assistance Committee (DAC) of the Organisation for Economic Development and Co-operation 84

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(OECD).’85 The 2015 Act, therefore, compels the UK to spend an equivalent to 0.7 per cent of GNI that meets the criteria of ODA as defined by the OECD DAC. The aid budget is not a pot of money that can simply be repurposed. If the nature of the project does not meet ODA criteria, it cannot come out of the aid budget as defined by the Official Development Assistance Target Act and must be funded from elsewhere. On 26 November 2020, the Foreign Secretary indicated that the government may seek to pass new legislation to supersede the 2015 Act.86 At the time of writing it was not clear whether this would focus solely on changes that permitted the Government to spend less on ODA, or whether it would seek to change the connection of the aid budget to ODA itself. Were it to do so, and seek to define a sum of money as an ‘aid budget’ that is not ODA eligible, it would be an exercise in branding rather than internationally recognised development aid. Unless this happens, the FCDO will face internationally agreed constraints as to what it can spend the aid budget on. The first criterion used by the OECD to define ODA is the recipient. The OECD defines the list of potential ODA recipients as consisting of ‘all low and middle income countries based on gross national income (GNI) per capita as published by the World Bank, with the exception of G8 members, EU members, and countries with a firm date for entry into the EU.’87 88 This is the rule that resulted in resources spent on British Overseas Territories in the wake of Hurricane Irma not qualifying as ODA: Anguilla, Turks and Caicos and the British Virgin Islands are all considered high-income countries. However, there is no express requirement that the UK aid budget be spent in countries like Zambia and Tanzania over Ukraine or the Western Balkans: that was a choice informed by DFID’s stated strategy to use its budget to target poverty alleviation. It was not necessary to merge DFID into the FCDO to spend aid money in middle-income countries.

Overseas Development Assistance Target Act 2015 http://www.legislation.gov.uk/ukpga/2015/12/pdfs/ukpgaen_20150012_en.pdf 86

Hansard HC Oral statement 26 November 2020 vol 684 col 1018. [Electronic version] DAC list of ODA recipients, OECD http://www.oecd.org/dac/financing-sustainabledevelopment/development-finance-standards/daclist.htm 87

Although the G8 has now formally become the G7 and despite being an upper-middle income country, Russia is not an eligible recipient of ODA.

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A second criterion is that ODA must ‘be concessional in character’ (OECD 2019). Funding can either be in the form of grants that do not have to be paid back or loans that do, but loans only qualify if they are cheaper than the recipient country could secure from commercial lenders. A third criterion, and probably the most controversial, is around the objectives of aid spending. ODA rules specify that funding must be ‘administered with the promotion of the economic development and welfare of developing countries as its main objectives’ (OECD 2019). The UK government has, in recent years, committed significant political capital to trying to change the criteria of ‘economic development and welfare’, most notably in 2016, but not sufficiently that the Conservative election manifesto in 2017 didn’t state a desire to amend the rules further. Reforming ODA definitions is a slow process and not one that is likely to allow greater flexibility for the FCDO, at least in the near-term. One area of contention is the strict controls that are in place over what specific military interventions qualify. Military spending only counts if it relates to training partner country military employees under civilian oversights with a clear development purpose: it helps to address abuses, prevent violence against women, improve the humanitarian response and promote good governance (DAC 2016b). As long as the UK’s aid budget is defined by ODA, what it can be spent on will be tightly controlled. As such, the arguments that the merger will allow the aid budget to be spent differently, or more in the national interest, are unfounded. Instead, it may be the case that the merger facilitates more efficient spending with tighter coordination. The lessons from other countries who have made similar mergers are instructive. Lessons from other countries Until now, the UK has been unique amongst virtually all donor countries in that it has maintained a development ministry responsible for both policy and implementation with its own cabinet-level minister. This had also been the case in Canada and Australia before both countries conducted departmental mergers in the 2010s in which their independent aid agencies were fully integrated into foreign affairs departments. The model in which the

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foreign ministry assumes direct control over aid policy and delivery is the one that is currently being implemented in the UK. Canada The Canadian International Development Agency (CIDA) was merged into the Department of Foreign Affairs in 2013 to form the Department of Foreign Affairs, Trade and Development. The department was later rebranded as Global Affairs Canada (GAC) in 2015 by Justin Trudeau’s new Liberal government. As in the UK, commentators spoke of the opportunity to build a more coherent international programme with improved efficiency, whilst others raised concerns that development policy and spending would be subordinated to commercial and diplomatic interests (Mackrael 2013). Speaking to the ODI think tank in 2020, Elissa Golberg – a senior civil servant in GAC – outlined some of the successes of the merger.89 She posited that it led to better public policy making in Canadian global affairs and that there was now more coherent advice being given to the government, as there was now less bureaucratic friction with debates happening internally before advice is consolidated. Although the department was still ‘learning’ seven years on from the merger, she also observed that the department was able to maximise its effectiveness by bringing an integrated package of tools to the world stage, with diplomacy, advocacy, stabilisation, development, trade, and investment running in greater synchronisation. Research by Nilima Gulrajani (2018) at the ODI suggests that greater efficiencies were indeed found following the merger, with administrative costs at GAC falling from 5.2 per cent to 4.6 per cent of ODA spend between 2013 and 2015. However, Gulrajani warns that these savings should not necessarily be attributed to the merger as they were likely driven by pre-planned staffing changes. Professor Stephen Brown from the University of Ottawa supports this assessment and has argued that the forcing together of two different cultures has made bureaucrats ‘more generalist than specialist,’ adding that there is no real evidence of a more coherent foreign policy agenda as Canada’s ‘feminist aid policy’ has not 89

What next for UK International Development? ODA https://www.odi.org/events/17073-what-next-ukinternational-development

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been echoed in the country’s broader international work (Young-Powell 2019). Additionally, an internal government report found that it could take some former CIDA employees up to 10 years to adapt to the new culture at Global Affairs Canada (Blanchfield 2016). Accepting the lengthy challenges of joining different bureaucratic cultures, Golberg advised patience and flexibility, with the recognition that a merger involves harmonising different speeds – with development projects often spanning years whereas diplomacy is more focused on short-term response – and that a new hybrid culture inevitably takes time to develop. To mitigate against this, she recommends that a new department identify common policy threads, such as gender-based violence and economic development, to integrate new teams quickly, and emphasises the importance of continuing to place value on expertise in different workforce streams. Above all, she stressed that the key to making any merger a success is to ensure it is guided by an overarching policy mission – such as Canada’s focus on feminist policy work. This is something that key UK officials have echoed. Former Secretary of State, Anne-Marie Trevelyan, told the International Development Committee that poverty reduction will remain key to the values of the new department, whilst acting Permanent Secretary, Nick Dyer, stated that the merger can be done correctly if it is guided by a strong vision and a strong commitment.90 There is some evidence to suggest that Canada has seen a reduction in its global influence since the merger. Before CIDA was merged into GAC, Canada ranked eleventh on the Centre for Global Development’s Commitment to Development Index in 2012. This ranking subsequently dropped to a low of seventeenth in 2018, and the most recent index places Canada at fourteenth.91 Canada also continues to fail to meet its 0.7 per cent target, having spent just 0.27 per cent of GNI on ODA in 2019 (OECD 2020). Although the UK continues to rank very highly on the commitment index, and the Government has promised that international development remains at the core of its global agenda, the International Development Committee expressed its concern that ‘aligning aid more closely with foreign 90

Effectiveness of UK aid: potential impact of FCO/DFID merger, International Development Select Committee, July 2020, https://publications.parliament.uk/pa/cm5801/cmselect/cmintdev/596/59607.htm 91 Commitment to Development Index 2020, Centre for Global Development https://www.cgdev.org/publication/commitment-development-index-2020

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policy goals and national interests have the potential to damage [UK] soft power’ (IDC 2020, s.37). The Committee also heard evidence from the National Audit Office that ‘departmental reorganisations can be costly and disruptive’ and that ‘the intended benefits of reorganisations are often poorly defined, making it difficult to subsequently judge whether the changes represented value for money’ (ibid, s.36) – reflecting the concerns about administrative costs raised in Canada. Australia The departmental merger conducted in Australia has several echoes of the Canadian case. In 2013, Australia’s standalone aid agency AusAID was merged into the Department of Foreign Affairs and Trade (DFAT), with its work programmes re-evaluated and fully integrated into the administration of DFAT. The merger followed the election of a new centre-right government led by Tony Abbott, who expressed a desire to align Australia’s aid budget more with the government’s diplomatic priorities as part of a wider streamlining of the country’s bureaucracy. An AU$4.5 billion cut to the foreign aid budget was mooted as part of these plans, which critics argued would damage the country’s global standing and lead to the conflation of development objectives with commercial trade interests (ABC 2013). The merger announcement in Australia came with little forewarning, which meant there was minimal workforce planning and no consideration of the impact, leading to a culture clash not dissimilar to that experienced in Canada (Young-Powell 2019). Most significantly, the merger led to the immediate exodus of senior-level expertise and – according to an independent review of the merger conducted by the strategist Richard Moore – this markedly impacted the capability of Australian aid, resulting in a loss of strategic vision, less transparency, a devaluing of development skills and knowledge, and worse performing aid projects (Cornish 2019). The expected cuts to the aid budget also came to fruition and, since the merger, Australia has consistently failed to meet the 0.7 per cent target, with the most recent OECD summary reporting that the country spends 0.22 per cent of GNI on ODA (OECD 2020). Claire Leigh, a director of international development at Save The Children, also warned that

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the disappearance of AusAID led to increasing proportions of aid being ‘diverted for controversial uses such in-country refugee costs,’ as well as ‘aid under DFAT increasingly outsourced to private firms, with DFAT having arguably lost much of the expertise to manage aid in-house as a result of the merger’ (Leigh 2017). Despite this, Australia remains the dominant aid donor in the Pacific region, although the rise of China may soon challenge this. If this is the case, then an integrated strategy towards China in the Pacific that includes aid policy may prove to be a benefit of the merger, although DFAT must first address issues with the delivery of aid that has seen expenditure funnelled through Australian NGOs and private contractors rather than directly on government-managed development projects in the Pacific (Sen 2020). Richard Moore’s independent review did identify some positive consequences of the merger. He found that early morale problems ‘have largely receded’ five years on from the reorganisation, and many former AusAID staff moved into new roles within the department. DFAT ‘bedded down its new development co-operation business’ with programmes being delivered and independently vetted results appearing strong. He also praised the leadership of the department, singling out chief civil servant Frances Adamson and her senior team for a ‘systematic, whole-of-department approach’ with DFAT managing to meet ‘nine out of 10 of the government’s strategic targets in aid and development.’ The whole-of-department approach was assessed to have ‘significantly enhanced Pacific policy’ and led to ‘stronger private sector collaboration and improved humanitarian action’ (Donaldson 2019). Caveating these successes, Moore warned that a deterioration in skills and systems was looming, capability in programme design and management declined with the generalisation of skills and the loss of specialists, and a lack of clear strategic direction risked poor development coordination. Further models Aside from full departmental independence and full departmental integration, there are two other administrative models from which lessons can be learned. The first is a semiautonomous model as used in Norway and Sweden. Norway specifically is an interesting case study as the Norwegian Agency for Development Cooperation (Norad), previously a bureau that operated at arms-length from the government, was merged with the Ministry of The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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Foreign Affairs in 2014. Under the new model, Norad is a subsidiary directorate within the foreign affairs ministry, with the Minister of Foreign Affairs ultimately responsible for both policy and implementation. Supporters of this arrangement have argued that the merger has given development greater political visibility in foreign affairs, and Norway’s international reputation in the aid community has been maintained by a growing aid budget (YoungPowell 2019). However, this hybrid model can mean the benefits of full integration or full separation are not realised, leading to disadvantages on both sides. Martin Samuelsen, Director at KPMG’s International Development Advisory Services, notes that the focus of aid policy can shift as foreign ministers with different preferences come and go, whereas an independent Norad could focus more on long-term thinking. He also identifies that the advantage of full integration is that it avoids overlap in policy streams, something that the design of mergers in Canada and Australia has sought to correct (Young-Powell 2019). The second alternative is the United States model where the strategic direction and overall foreign policy is set by the Executive, and a separate executing agency, the United States Agency for International Development (USAID), has independent responsibility for implementation. A similar model is also used in several European countries including France and Germany. While USAID maintains a distinct identity and autonomy, it is run solely by an administrator with no direct oversight from a dedicated minister with an international development portfolio, instead reporting to the Secretary of State. With no dedicated political champion, development priorities can be secondary to the interests of larger federal departments such as the State Department and the Department of Defense, and whilst USAID is able to harness aid expertise and experience in managing large spending programmes, its staff are limited in how this can be combined with policy planning and direction. This is partially reflected in how the United States performs compared to other countries, with the country ranked eighteenth on the Commitment to Development Index and spending only 0.16 per cent of GNI on ODA in 2019 (OECD 2020). Ultimately, while the model used for a merger is consequential, equally important is the intention behind the merger. If the intent is to strengthen development and diplomacy by combining departments then the result may well be positive. If the intent is to deprioritise

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development as well as assert foreign ministry control then the result can only be detrimental. The next steps taken by the FCDO are therefore crucial in demonstrating the Government’s ambition. Next steps for the FCDO The DFID and FCO merger carries risks and opportunities. By blending the two departments, James Hitchings-Hales (2020) hypothesised that, in practice, DFID country staff could end up handing money over to ambassadors to fund political projects or to support British companies trading there, making aid spending far less accountable and deviating from previously established norms of separation between aid distribution and political will. Additionally, civil servants in DFID are development experts with experience in managing complex on-the-ground projects, whereas the FCO is primarily staffed by diplomats whose specialisation is understanding local politics and building relationships with the express purpose of benefiting the UK – two very different skill sets with two, sometimes opposed, objectives with no guarantee that of harmonious blending (Durrant 2019). The FCO never achieved high ratings on Publish What You Fund’s Transparency Index, the merger offers an opportunity to adopt DFID’s world-leading processes and ensure that all spending under the merged department meets the highest possible standards of transparency and accountability. (See Recommendation 3). Giving evidence to the International Development Select Committee, the acting permanent secretary of DFID, Nick Dyer, assured MPs that transparency would be a critical consideration during the merger, and that a transition team composed of civil servants from both departments would help to reconcile the differences in departmental cultures. In the same committee session, Trevelyan clarified that the merger was intended to be a total blend of the two departments and that DFID would not become a distinct agency within the FCO, moving away from the former Overseas Development Administration model that the UK previously adopted and favouring the style of mergers seen in Canada and Australia.92

International Development Committee, Humanitarian crises monitoring: impact of coronavirus, HC 292, Q165

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Aside from the importance of maintaining high levels of transparency around aid spending, and retaining the expertise of experienced staff, the importance of fostering a common bureaucratic culture cannot be overstated when implementing a departmental merger of this kind. Evidence from Canada and Australia suggests that the process can take years and have an adverse effect on the quality of aid as it happens. Proponents of the merger should be under no illusions of the amount of time that will be required before the FCDO is as effective at delivering development funding as DFID was. Another concern is a loss of morale and accompanying loss of expertise. Should there be difficulties in establishing a new shared culture, there is a risk of an exodus of development experts, with Sarah Pantuliano of the Overseas Development Institute warning that considerable expertise on the ground could be lost (McVeigh 2019), and former development secretary Andrew Mitchell predicting that many civil servants will be poached by the United Nations and other international organisations in the event of DFID losing its status and prestige (Mitchell 2020). The Australian experience suggests such concerns are well founded. A lack of forewarning in Australia (as here) contributed to a loss of seniorlevel development expertise. This should be a genuine concern in a department which has already been acknowledged to be lacking in-house project management expertise. The loss of experienced staff in Australia led to higher levels of outsourcing to private contractors and a consequential effect on accountability, transparency, and quality, something the Foreign Secretary has already clearly stated is a concern.93 Strategies to mitigate against slow adjustment, such as focusing on common policy threads; valuing, rewarding, and incentivizing retention of specific expertise in various areas; and allowing flexibility in how certain teams operate should all help to alleviate this risk in the UK. Strong and determined leadership is key. In Australia, the whole-of-department approach pursued by its chief civil servant is credited with the improvement in the department’s operation. The political autonomy afforded by retaining a minister responsible for international development, separate to the foreign affairs minister, is no doubt also beneficial. In Norway, the lack of a dedicated minister leaves aid policy exposed to the changing preferences of the foreign minister and in the United States, for better or worse, 93

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there is no direct relationship between policy and implementation. The mergers in Canada and Australia retained ministers with jurisdiction over development policy – in Canada, the minister remains a cabinet-level position; in Australia, the minister does not attend cabinet. In the UK, the responsibilities of the international development secretary have been transferred to the foreign secretary and there is currently no separate junior minister within the FCDO responsible for oversight of development. The lessons from other countries – from those who have merged departments and those who haven’t – along with the UK’s own experiences, leave no doubt that clear, empowered, political leadership is critical to the functioning of a high-quality development programme (see Recommendation 2). Lastly, commitment to an overarching strategic vision is also an important lesson. In Canada, a feminist foreign policy helps to guide the mission of GAC, although it is debatable to what extent this has been integrated more broadly. Australia, meanwhile, focuses strongly on development in the Pacific, but a lack of coherent vision and strategy has led to a decline in the effectiveness of delivery. The Foreign Secretary has outlined a number of core issues for the new FCDO, including girls’ education and climate change, but so far any overarching vision is waiting for the upcoming strategic framework. The evidence suggests that it will be necessary to ensure that the UK’s effectiveness in delivering development aid does not weaken as a consequence of the merger (See Recommendation 6). Making aid work for the British people The FCDO’s immediate priorities are not in doubt: the COVID-19 crisis continues to upend the structure of society across the world, refocusing both public and state priorities. In relation to UK development policy, that has led to renewed weight being attached to global health outcomes, research & development, pandemic response, state intervention and security. The role of FCDO going forward, at least in relation to its development work, will first and foremost be influenced by this global crisis, but will also include two longer-term priorities. One is the ‘Global Britain’ policy, which is the Government’s strategy to create an open and international UK outside of the EU with new opportunities for trade, diplomacy and defence. The other is climate change, arguably the greatest international challenge of our time and one that was a significant focus of DFID’s work.

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These three priorities are set against the context of a shrinking budget as the response to COVID-19 has wiped billions from the UK economy, with GNI for 2020 set to fall sharply resulting in a commensurate cut in the aid budget (Worley 2020c) and the Chancellor’s announcement of a cut of the aid budget in 2021 from 0.7 per cent of GNI to 0.5 per cent. For this reason, the new department must have absolute clarity over its priorities. The Prime Minister has offered some details over what these priorities may be. In his statement signalling the creation of the FCDO he stated that ‘the Foreign Secretary will be empowered to decide which countries receive – or cease to receive – British aid, while delivering a single UK strategy for each country, overseen by the National Security Council’ (Johnson 2020) adding later that ‘UK overseas aid has been treated as some giant cashpoint in the sky that arrives without any reference to UK interests, to the values that the UK wishes to express or to the diplomatic, political and commercial priorities of the Government.’94 However, as the previous section suggested, the merger itself does not mean that the UK aid budget can now be used for the ‘diplomatic, political and commercial priorities of the Government’ without consideration as to whether they qualify as ODA. The FCDO faces legislative constraints on how it spends the aid budget, though these may be undone in the near future. Until they are, the main effect of the merger will be bureaucratic disruption to the delivery of existing UK aid programmes, and a clear opportunity to rewrite the strategy that guides how the UK development budget is spent. The GDC’s first report, “Does Development Aid Work?” found that a clear majority of studies over nearly 50 years show a positive and significant relationship between aid, growth, and poverty rates (Howarth 2017). Even modest amounts of aid can add as much as 1.5 per cent to a recipient country’s annual growth. It also found that although aid can never be the main driver of development, it represents just a fraction of the wealth generated via trade and industry, the wealth generated by economic activity tends to benefit richer groups in society, while aid particularly benefits the poorest. It further found that aid can be particularly effective where private investment is not readily available, such as research into drugs and technologies needed mainly by poor countries, or programmes in fragile states. DFID’s own impact estimates point to the millions of lives that the UK’s 94

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development programmes currently benefit, reducing the impact of disease, increasing the average number of years spent in school, and reducing infant mortality. Even criticisms that aid fuels corruption have limited academic backing, with many economists arguing that corruption is more a consequence than a cause of poverty. Additionally, several studies suggest that aid is associated with reduced corruption in recipient countries and is no more vulnerable to misuse than private investment (Riddell 2014). It can be said with confidence, then, that aid ‘works.’ That is, well-run aid projects can help reduce poverty and accelerate economic growth. However, aid does not exist in a vacuum. It is, on the whole, public spending, and whilst it may be the case that aid is no more vulnerable to corruption than private investment, private investment is not funded by British taxpayers. The case for aid, then, rests not solely on academic estimates of its effectiveness, or even on the results generated by the entity that administers it, but on whether the British public are willing to give a mandate to their government to spend their taxes on aid. That aid works is not sufficient. It has to work in the eyes of the British people. For nearly two decades there has been consensus about the ultimate scale of UK development spending. Through multiple general elections, all major parties have committed to the UN target of spending 0.7 per cent of GNI on aid, though they have varied in how and where they would spend that money. That consensus has been shaken. The Conservative Party’s manifesto for the 2019 General Election included a commitment to maintain the 0.7 per cent target; yet at the end of November 2020, less than a year after the election, the Chancellor announced plans to cut that figure to 0.5 per cent and maintain it at the lower level for the foreseeable future. In the short term, the Government can reduce the aid budget without amending the ODA Target Act. The Act allows for shortterm reductions in the level of aid spending in the event of a major change to the national income, as there has been as a result of the COVID pandemic. Longer term, however, new legislation will be required. Given the scale of criticism of the decision to cut aid spending, including the resignation of Baroness Sugg, a Minister for Development, such legislation seems likely to encounter strong parliamentary opposition.95

‘Foreign Office minister resigns as Sunak cuts aid budget’ The Guardian, November 2020 https://www.theguardian.com/global-development/2020/nov/25/uk-foreign-aid-budget-cut-chancellor-announces

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One of the driving forces behind the decision to cut the aid budget appears to be the Government’s belief that the British public support such a move. A study by YouGov found that two-thirds of Britons, across party lines, supported the cut.96 Foreign aid spending also tends to top lists of areas of spending that the public thinks are too generously funded: almost three times as many people think development spending should be cut (60 per cent) compared to the next nearest area of spending which is defence (20 per cent).97 Under previous governments, the depth of political support was sufficient to build and then maintain aid spending at 0.7 per cent of GNI in the face of public antipathy. That is no longer the case. Why is aid spending at the current level so unpopular? In Section IV, it was noted that the attempts of consecutive Secretaries of State to present aid as being in the national interest were unsuccessful. The connection between many of the investments DFID made and the purported benefits were too tenuous or abstract to resonate with the public. This, however, is insufficient to explain the depth of public opposition to aid spending. One driver is the press, aid sceptics, and some politicians who have mounted a series of attacks on individual aid projects and the overall aid budget, painting a picture of a budget that is spent wastefully on vanity projects. Unless or until a government is able to successfully counter these attacks, there seems little prospect of a rally in public levels of support for development. Although polling has shown the majority of the British public support the aid cut, there are nevertheless signs that the public does continue to take a positive view on development – particularly when aid and development spending is broken down into the sum of its parts. The recent British Foreign Policy Group survey, which polled Britons on foreign aid priorities, found wide-ranging support for numerous development activities (Gaston and Aspinall 2021, pp. 69-76). The priorities with the highest levels of support were global health and vaccinations (76 per cent), emergency support for crises such as natural disasters

‘Two Thirds of Britons Support Cutting the Foreign Aid Budget’ November 2020 YouGov https://yougov.co.uk/topics/politics/articles-reports/2020/11/25/two-thirds-britons-support-cutting-foreign-aidbud 97 YouGov Tracking Poll https://yougov.co.uk/topics/education/trackers/what-sector-is-the-uk-governmentspending-too-much-on The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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(74 per cent), and delivering infrastructure for essential public services (72 per cent). Alleviating poverty, reducing corruption, fighting environmental degradation, and creating new investment opportunities also received the support of two-thirds of survey respondents. There is every reason to believe, therefore, that the Government can carry public support for development spending going forward provided that it makes clear its spending priorities and focuses them on popular areas. In his statement to the House of Commons on 26 November 2020, the Foreign Secretary gave some details on the Government’s aid strategy, including its core priorities. They were: •

climate change – including protecting biodiversity and financing low-carbon and climate-resilient technologies such as solar and wind in low-income countries

•

global health – with a particular reference to multilaterals: the Global Fund, Gavi, COVAX, the International Finance Facility for Immunisation, and the World Health Organisation

•

girls’ education – supporting the Global Partnership for Education and aiming to get 40 million more girls into education

•

the “building blocks of development” - resolving conflicts, alleviating humanitarian crises, defending open societies, and promoting trade and investment, including by increasing UK partnerships in science research and technology

•

aid effectiveness - strengthen accountability and value for money, reducing reliance on expensive consultants for project management and strengthening in-house capability.

He repeatedly, however, refused to be drawn on what should be cut, and rejected the notion that the budget would be ‘salami-sliced’ with the same proportion taken from every section of it.98

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The future aid strategy The priorities outlined by the Foreign Secretary to date are a welcome step towards an aid narrative that can garner widespread support from the public. They represent a clearer, tighter view of the national interest and target spending areas where there is a common understanding that investment overseas will benefit people in the UK. They are also a solid foundation for the development component of the ‘Global Britain’ agenda combining expressly moral objectives (girls’ education) with global objectives in areas where the UK has a leading role (climate change), and areas where the UK has a strong tradition of effective development funding (global public health) and there is strong public support. Even some of aid’s most ardent sceptics, the United Kingdom Independence Party, stated that they would maintain an aid budget for humanitarian crises and for tackling global health threats in their 2015 election manifesto. Over the coming weeks and months, the Government will further outline its priorities for the new department. These are some of the options. Pandemic resilience COVID has been uniquely damaging, but it is not a unique threat. It shares many similarities with the disease that was, until 2020, the world’s leading infectious killer: tuberculosis (TB) and has, consequently, proven to be massively disruptive to existing TB programs as resources have been pulled away to deal with the pandemic. TB and COVID share similar methods of screening and testing, and there has been a shortage of resources to deliver either in many low- and middle-income countries. Many of the isolation wards and doctors developed for TB have been deployed for COVID, but there are not enough of either. They even share similar stigma around people admitting to whether they are ill or not. Without years of investment in screening, testing, and medical infrastructure, the impact of COVID could have been much worse. With more investment in those same things, it could have been better. There is no saying where the next pandemic will emerge, but it may be even more destructive if it originates in a country with very weak infrastructure to tackle lethal respiratory pathogens. The more cases of a respiratory pathogen pandemic that can be The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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dealt with at source, the fewer that will reach the UK and the safer we will all be. Whilst we cannot know where the next pandemic will originate and how it will spread, we can say with confidence that we will know whether we can handle the next LRP pandemic by how well the world tackles the current one. As such, the Government should focus specifically on strengthening the global response to LRPs like TB. Data and technology COVID cases are reported daily, in real-time. Most existing epidemics, such as HIV, malaria and TB, are not. As a result, aid agencies like DFID cannot mount rapid responses to surges in existing pandemics because they do not know about the outbreaks occurred until it was too late. Nor can they drive targeted interventions in certain areas with high prevalence until years later. Seeing real-time results data also supports the possibility of seeing diagnostic utilisation in real-time. Data that networks diagnostics to allow real-time reporting enables more efficient, effective programming, not just for pandemics, but for other health conditions that use those same diagnostic platforms. Better data and technology aren’t only about maximising the use of diagnostic platforms: they can also play a major role in preventing epidemics where a vaccine is available. DFID was a global leader in driving aid effectiveness, something that the FCDO will also make a focus. Under DFID, great strides were made in relation to financial transparency and monitoring, primarily through the creation of IATI. It has not been so easy to drive a common standard for impact: there are often wide gaps between ‘official data’ on vaccine coverage and the actual immune responses of a population when tested. As a result, governments think that their vaccination programmes are achieving better coverage than they actually are, which means herd immunity is weaker and the risk of disease transmission is much higher. A combination of GPS and biometric technologies, along with the ubiquity of smartphones, allows for the potential to see real-time vaccinations for something like polio, along with the ability to revisit the same site multiple times and know who has been vaccinated and who has not. This could have a transformative impact on the effectiveness of aid interventions worldwide, not just for vaccination roll-out, but also for cold chains, the use of clean cookstoves, and even to see whether malaria bednets are being properly used every night. The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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Multilaterals An approach to development built around global public health would also present an opportunity to rehabilitate multilateralism which, at present, is widely criticised by aid sceptics but through which much of the UK’s global influence is felt. A host of UK-backed multilaterals have made major contributions to slowing the spread or fighting the pandemic, including some of those mentioned by the Foreign Secretary in his statement to the House. Research suggests that COVID has resulted in major disruption to childhood immunisation, infectious disease prevention, and many other ongoing health programmes (Abbas et al 2020). A swift, dedicated, infusion of resources for multilaterals like the Global Fund to Fight HIV/AIDS, TB and Malaria will be needed to ensure that the response to these diseases bounces back quickly after the pandemic. The UK is well-situated to provide support given the scale of its budget, whether at 0.5 or 0.7 per cent, and doing so could be the difference between seeing a decade or more of progress going to waste and the resurgence of some of the world’s leading killers. Diagnostics and surveillance If we cannot test people, we cannot isolate or treat them properly and we cannot stop diseases from spreading. The global diagnostics market is complex. Mechanisms already exist to support the distribution of drugs, and Gavi, the Vaccines Alliance, was built to ensure that every child, everywhere, had access to the core list of WHO-approved vaccines. But for diagnostics, the field is empty. The UK is a world leader in biotech. It is also a major funder of FIND, which helps develop and distribute diagnostics. As such, the UK is well placed to lead a global effort to broker the systems and solutions needed to ensure that everyone has access to quick diagnostics and that those diagnostics, as much as possible, can be used to respond to new pandemic threats when they emerge, including antimicrobial resistant pathogens. Global health research and development A further component that was missing from the Foreign Secretary’s statement was global health research and development for products for which there is not a traditional market, such as a malaria vaccine. The GDC’s first report covered how this kind of spending has

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outsized impact because it fills a gap left behind by the private sector which is less willing to invest in diseases where there isn’t a market. It is also an area where the UK benefits directly economically. Whilst the UK cannot mandate that ODA R&D funding should go directly to UK institutions, as this would constitute tied aid which is illegal under the 2002 International Development Act, the UK nonetheless wins the lion’s share of projects through such funding, and indeed from other countries’ development funding, due to having a high concentration of some of the best research institutions in the world (see Recommendation 8). A report by the All-Party Parliamentary Group on Global Tuberculosis (APPG GTB), published in December 2020, highlighted concerns among academics related to global health research and development funding, and made a headline recommendation that the Government should make an explicit commitment of funding for the remainder of this parliament. A strategy for the future: opportunities for improvement The Integrated Review indicated that there will be a new international development strategy within the next year, ‘to ensure close alignment of UK aid from 2022 onwards with the objectives in [the Review’s] Strategic Framework.’ The Review also states that this strategy will build on the strategic priorities already outlined by the Foreign Secretary in his letter to the IDC.99 An international development strategy is an encouraging sign that development priorities will not be subsumed by the overarching objectives of the FCDO, particularly given the loss of a dedicated Cabinet-level development minister to advocate for these priorities. It is also an opportunity to project a longer-term vision for international development in the 2020s beyond the basic priorities identified in the Foreign Secretary’s letter, as well an opportunity to address areas of concern. The first such area is that the strategic framework for ODA does not commit explicitly to the mission of poverty reduction. While the challenges identified by the Foreign Secretary are important aspects of development, such as girls’ education and health security, the ultimate mission that guided DFID is in danger of being lost. Moving away from the

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ambition of poverty reduction would be a retrograde step. The international development strategy is a chance to reaffirm the UK as a superpower in the global fight against poverty, and add new impetus to meet the SDGs (see Recommendation 3). The second opportunity is to reaffirm the UK as a leader in the multilateral arena. The Foreign Secretary’s letter, while offering reassurance over the status of core investment in development banks, goes on to say that bilateral programmes will be the FCDO’s ‘default’ and – with exceptions such as global research – ‘all other centrally managed programmes should move to bilateral or regional delivery models where it is more cost-effective or efficient to do so.’ Bilateral programmes undoubtedly have their benefits, such as greater capacity for country ownership, but it is a mistake to cast multilateral programmes as less efficient or effective. Multilateral initiatives, such as the COVAX initiative and the Global Fund, not only have powerful resource to drive material change in the developing world but are effective forums for the UK to work with its allies and exert its influence as a convenor (see Recommendation 10). The international development strategy offers a chance to present the UK as a country that treats multilateral development co-operation as a positive equal to bilateral initiatives, not as a less-than-ideal necessity. Third, an international development strategy is likely to make clear the size of the development portfolio within the merged FCDO, especially if the ODA budget is set to increase again in future years. Overseeing a budget of at least £10 billion and an expansive programme of multi-year aid projects will require detailed attention by the Foreign Secretary, who is already responsible for the extensive Diplomatic Service, Commonwealth affairs, the Secret Intelligence Service, and who also serves as First Secretary of State. Compared to a dedicated minister for development, his capacity to oversee UK international development as effectively is doubtful. To prevent any deterioration in the standards and quality of aid provision, a senior minister within the FCDO should be given responsibility for day-to-day oversight of international development and the implementation of the international development strategy – and ideally this minister would also sit in the Cabinet, or attend (as the Chief Secretary to the Treasury does) (see Recommendation 2). Finally, any strategy for the future is a chance to build a positive relationship with the Treasury. Such a comprehensive, multi-year plan is reliant on stable funding and it is entirely

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sensible for it to be drafted in close consultation between the two departments. By elucidating a vision for UK international development throughout the 2020s in partnership with the Treasury, the FCDO will have an opportunity to make a positive case for the value of aid and the UK’s return on investment. Whereas DFID enjoyed a close alliance with the Treasury during the New Labour years – partly as a result of shared economic and internationalist values – the Treasury’s interest and understanding of aid has since dwindled, culminating in the recent cut to the ODA budget. A new strategy, grounded in the ambitions of Global Britain and any post-COVID economic policy, would help to rebuild this alliance. The next subsection addresses specifically the Treasury’s aid cut and the budget’s prospects going forward. How much should the UK spend on aid? Ahead of the DFID/FCO merger, media reports emerged that the Chancellor Rishi Sunak was considering cutting the UK’s foreign aid budget to below 0.7 per cent in order to finance costs related to the country’s COVID recovery. This is on top of a fall in the UK’s 2020 aid budget of £2.9bn due to lower GNI as a result of COVID (Worley 2020d). In his Spending Review Statement in November 2020, the Chancellor confirmed that he would cut the aid budget to 0.5 per cent of GNI on a temporary basis in 2021, with an intention to return to the 0.7 per cent level when ‘fiscal circumstances allow’.100 As previously noted, the Government is able to make a temporary cut without amending the Official Development Assistance Target Act 2015, which writes the spending commitment into law. However, the Foreign Secretary acknowledged that potential legislation would be brought forward to allow multiple years of reduced spending. Such a move would break the Conservative Party’s 2019 manifesto commitment to maintain ODA at 0.7 per cent of GNI. The decision was condemned by nearly 200 charities in the development community and from within Conservative ranks, with former foreign secretary Jeremy Hunt, former prime minister David Cameron, and former development secretary Andrew Mitchell all voicing concern that a reduction would signal the UK’s retreat from its 100

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international commitments at a time when ODA is crucial to a global pandemic response. Nevertheless, critics of aid have welcomed the idea of a cut, with The Times opining that a short-term reduction would be ‘urgent and justified’ as ‘elective targets should not be sacrosanct,’101 and the Daily Mail reporting positively on the prospect of ‘wasteful’ programmes being cut. A recent report by the One Nation Caucus – a grouping of liberal Conservatives traditionally supportive of the aid programme – offers a third way, proposing that the 0.7 target be moved to a multi-year rolling timeframe to eliminate self-imposed spending deadlines and strengthen long-term aid objectives (Mangnall et al 2020). This would also require an amendment to the 2015 ODA Target Act, but would allow greater flexibility in the FCDO’s annual spending at times when there is a demand for frugality. However, such a move if enacted now would require spending to rise to an unprecedented level in subsequent years to compensate for the initial cut to 0.5 per cent. Tackling the deficit The principal argument deployed to justify the cut was that the budget deficit, stated by the Foreign Secretary to be close to £400 billion, made it a ‘matter of necessity’.102 Against this, as outlined in the questions following the Foreign Secretary’s statement, is that the 0.7 per cent budget was already self-regulating in that the level of aid spending would fall with GNI. The Government had already announced one round of cuts as a result of the effects of the pandemic on the economy in June (BBC 2020b). Furthermore, the cut will do little to address the scale of the deficit when other budgets (such as Defence) are being increased. At 1 per cent of the deficit, it is closer to a symbolic measure than a concerted effort to tackle a hole in the public finances. The symbolism warrants consideration. It can be seen as a statement of the need to make sacrifices to live within the country’s means. It can also be seen as a statement that our commitment to some of the world’s poorest countries – already cut as a consequence of the ODA budget matching the fall in GNI – should face a far deeper retrenchment than other government programmes: this year, the ODA budget will fall by over a third in real-terms. Moreover, many of the countries who are recipients of UK aid are themselves experiencing challenges 101 102

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raising money through debt issuance whilst UK borrowing rates are at historic lows (IFS 2020). The G20 has acknowledged this by issuing a debt suspension, but Zambia has already defaulted and there are fears that others will follow (Financial Times 2020). Furthermore, in the wake of the last major recession, UK aid spending rose, with the consequential increases in soft power discussed above. Had the UK decided to maintain the 0.7 commitment, even now, in the wake of a global financial crisis, the impact would have been outsized: an unequivocal statement about a ‘Global Britain’, standing by its promises even in the toughest financial times. Comparison with other countries An alternative argument for the cut to the aid budget is that other countries are not as generous as the UK. In announcing the cut, the Chancellor said that ‘Based on the latest OECD data, the UK would remain the second highest aid donor in the G7. Higher than France, Italy, Japan, Canada and the United States. And 0.5 per cent is also considerably more than the 29 countries on the OECD’s development assistance committee – who average just 0.38 per cent.’103. In later media interviews, the Chancellor claimed that the UK’s aid budget would still, proportionately, be four times larger than that of the US.

103

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Country

% of GNI spent on ODA

Turkey

1.15

Luxembourg

1.05

Norway

1.03

Sweden

0.96

Denmark

0.71

United Kingdom

0.70

Germany

0.61

Netherlands

0.59

Saudi Arabia

0.56

UAE

0.55

France

0.44

Belgium

0.42

China

0.36

Japan

0.29

Austria

0.28

Canada

0.27

Australia

0.22

USA

0.16

Table 3: Selected countries and GNI spent on ODA (%) (Source OECD) The table shows that there is some merit in the argument that the UK’s aid budget is an outlier in terms of size. Indeed, critics argue that other G7 countries spend much less. The US spends 0.16 per cent of GNI in ODA, though it invests significantly in global health R&D in ways that don’t qualify as ODA but do benefit the world’s poorest countries. France’s budget is slightly less than 0.5 per cent. However, Germany has also hit and remains close to the 0.7 per cent target, a comparison that gets much less attention. Beyond the G7 countries, another frequent comparison is drawn with China, which spends an estimated 0.36 per cent of GNI on aid, less as a proportion than the UK will even following the proposed cut. However, China spends considerable amounts of money

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abroad in ways that do not constitute aid, such as some of the funds deployed through the Belt and Road Initiative. If the UK wishes to counter the influence of China – which has very different terms and values to the G7 in its aid delivery, and does not expect much in the way of governance from the countries with which it partners – it is not clear how Britain will do this by reducing development spending, which directly benefits the citizens of recipient countries. Nor is it clear how reducing development spending with its possible impact on UK support of the multilateral system will help to counter Chinese influence in that arena. A point worthy of consideration is that, compared to the US and China, the UK is not a military superpower, though it retains significant military capabilities. Neither is it a superpower in trade. In diplomacy, significant cuts have reduced UK reach, though the Embassy network remains extensive. Britain does not have as strong an impact or global influence in any field of foreign policy as it has had in development, where its budget and political leadership has led the world repeatedly over the last two decades. Surrendering that status, especially a leading status within the G7 given presidency of the group in 2021, and the shifting of many of the UK’s other geopolitical relationships, risks undermining the claims of Global Britain. Strategic alignment In his statement to the House of Commons, the Foreign Secretary argued that Britain will ‘make our aid go further by bringing it together with all these other elements ...’, by which he meant diplomacy, defence, and trade. Whilst he did not clearly state that this compensated for the cut, he did go on to expand on Britain’s peacekeeping operations. Similarly, the Chancellor justified the aid cut by stating that ‘overseas aid is of course only one of the ways we play our role in the world’, and noting that ‘the Prime Minister has announced over £24 billion investment in defence over the next four years, the biggest sustained increase in 30 years’.104 Scrutiny by the IDC and ICAI, in addition to our own research in our first report, outlines that combining aid spending with other policy objectives is unlikely to achieve aid objectives

104

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efficiently or effectively, and similarly unlikely to achieve the other policy objectives. Furthermore, as the Foreign Secretary did not lay out what would be cut, it is impossible to state what those policy objectives would be or whether they truly would be more likely to be achieved by a new strategic approach. Given the priorities stated and discussed above, and DFID’s prior success in those areas, there is limited rationale that the new departmental arrangements will compensate for the positive development impact of the projects that will be cut. Greater impact The Foreign Secretary concluded his statement by saying: ‘We will deliver greater impact from our aid budget at a time of unparalleled financial pressure.’ However, as the scale of the aid budget has not been determined by the nature of the projects that are to be cut, and there is no intention to ‘salami slice’ the budget, there is no evidence that the new spending target (0.5 per cent of GNI) is based on any calculations of its impact. The Foreign Secretary said that he would lead ‘a short cross-Government process to review, appraise and finalise all the UK’s ODA allocations for next year in the lead-up to Christmas’. At the time of determining the cut, then, there had been no assessment of what was required in the UK’s priority countries – whether in the Ukraine and Western Balkans as outlined in the Prime Minister’s announcement of the DFID/FCO merger or DFID’s existing partners – nor on the impact the aid budget could generate, but rather on an arbitrary justification of how much is the right amount. This is noteworthy given a decade of criticism, predominantly from the same outlets that support the cut, that the 0.7 target was ‘arbitrary,’ ‘random,’ and ‘elective’. The argument is that 0.7 per cent is just a figure that the UN settled on and is not based on any current rationale for how much funding would be required to make a material difference. There is some academic justification for the 0.7 per cent target, though it is now nearly five decades old, so this argument is credible (DAC 2016a). However, it is also a universally accepted figure, emblematic of what a developed country fully delivering on its commitments to poorer countries would be willing to bear. The 0.5 per cent target is just as arbitrary, random, and elective as the current target, except that it has neither the same international status, nor the same symbolic power of the The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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UK having been the first G7 country to hit the target and the first to legislate to maintain it. It is, therefore, hard to see how it will carry the soft power advantages outlined previously in this report. Furthermore, the decision to cut to 0.5 has been taken without any clear idea of what will be lost as a consequence. For a decade, Conservative Secretaries of State have argued that they have trimmed waste and driven more efficient development spending, with some justification. The UK’s portfolio of development projects is of high quality, so there will be an impact on the lives of the world’s poorest people as a consequence of a cut. To make an arbitrary decision of a cut without full knowledge of what will be cut is reckless: though it may not do great damage to Britain politically, it could potentially have a damaging impact on the lives of many people who suddenly find services that they rely on disappearing in the midst of an unprecedented economic slowdown. Entering 2021, the impact of the budget cut is beginning to manifest. The Government has announced it will be donating £87 million in humanitarian aid to Yemen this year, equivalent to a 60 per cent cut (Worley 2021). Further cuts are also due for 2021-22, with suggestions that aid to Syria could be cut by 67 per cent, aid to Libya by 63 per cent, and aid to South Sudan – where millions are facing a catastrophic famine – cut by 59 per cent (Geoghegan 2021a). Cuts to anti-corruption and human rights work have been estimated at nearly 80 per cent, with at-risk projects including a media freedom initiative in the Middle East, a flagship anti-corruption project in Tanzania, and efforts to tackle international flows of illicit finance (Geoghegan 2021b). The Voluntary Service Overseas – which receives half of its funding directly from FCDO – is shutting operations in 14 countries as a result of the budget cuts and is due to suspend a COVID-19 response initiative that supports 4.5 million people (Skopeliti 2021). Reduced ODA funding to UK Research & Innovation (UKRI) will also leave a £120 million gap between the organisation’s allocations and commitments for 2021-22, which may well damage the UK’s ability to prepare for the next global health disaster (UKRI 2021). Sir Mark Walport, who was the Government’s Chief Scientific Adviser from 2013-2017, has warned that the Global Britain ‘rhetoric’ of the Integrated Review has come apart from the ‘reality’ of cuts where ‘research and innovation appear to have been deprioritised’ (Walport 2021). Even The Times, which had voiced support for the

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aid cut when it was announced (see p.125 of this report), questioned that it was ‘an odd time for Britain to be cutting financial support for scientific research.’105 Will spending at 0.7 per cent be restored? The Government has stated that the budget will return to 0.7 of GNI ‘as soon as the fiscal position allows’. There is reason to doubt this commitment. The Government has neither stated when the budget will be restored nor what conditions would determine whether the fiscal position allowed it. The aid budget reached 0.7 per cent in the wake of the last recession and during a period of austerity, but there is little reason to believe that this Government will be so willing to increase spending once again at all, because the decision to cut the budget was so obviously political. The cut will have little meaningful impact on the deficit; there is no convincing evidence to support either it or the idea that it will be mitigated through a new strategic approach; and there was no plan to manage an overall budget reduction on such a scale – a full third. The decision obviously runs counter to the rhetoric of ‘Global Britain’, yet it was made anyway. Unless Parliament decides otherwise, it seems unlikely that this Government will restore ODA spending to 0.7 per cent of GNI for the foreseeable future. One possibility is that the Government could increase ‘development’ spending but under a wider definition so that it is outside the ODA rules yet is said to be part of the overall aid budget – effectively achieving the redefinition of aid that the Conservative Party had sought in its 2017 manifesto. This may have been indicated in the Integrated Review, which states the Government will ‘return to our commitment to spend 0.7 per cent of gross national income on development when the fiscal situation allows’ (Cabinet Office 2021, p. 5, emphasis added). It should be noted that this mention of a return to the 0.7 per cent target does not link the figure directly to ODA spending, and is not mentioned again in the Review’s section on ODA priorities (pp.46-47). As mentioned previously in this report, any redefinition of the UK aid budget cannot be taken unilaterally as the definition of ODA is set by the OECD DAC, so any reference to the 0.7 per cent target in future policy papers – such as the

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upcoming international development strategy – should make it clear how a return to 0.7 per cent will be achieved.

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Recommendations This report covers UK development policy from its inception through to the present day. It has explored the key moments that shaped Britain’s national approach to development: from the colonial era, through the Pergau Dam Affair, the creation of DFID, the landmark achievement of the UN’s target that developed countries spend 0.7 per cent of GNI on aid, the creation of the FCDO, and, lastly, a cut in UK aid spending and the proposed revocation of the 2015 ODA Target Act. We are at an inflection point in UK development policy. Over the last century, the trend moved in the direction of an ever greater focus on poverty alleviation with ever larger budgets. This trend peaked in 2013 with the achievement of the 0.7 per cent target. We are now moving into a new era, one marked by greater budgetary pressures and a requirement that the aid budget delivers in the national interest. That budget will no longer be delivered by a dedicated department which, according to the lessons of other countries who have made similar mergers, may face considerable challenges. However, the political salience of global health security has inevitably also risen. In the light of these developments and the research in this report the following ten recommendations are made: 1. Maintain the legal commitment to spending 0.7 per cent of GNI on development aid The 0.7 per cent commitment is a powerful symbol of the UK’s Global Britain strategy and has helped establish Britain as a superpower in the international development arena. The 0.7 per cent target, though largely symbolic, is a benchmark to encourage others and confers considerable soft-power benefits. Resiling from it is a mistake. While it is welcome that the Integrated Review signals a return to the 0.7 per cent target ‘when the fiscal situation allows’, this is a vague affirmation with no indication of when this may be. Should legislation be brought forward, any reduction should be time-bound, and the One Nation Caucus’s idea of moving to a multi-year rolling average target adopted to provide the FCDO with annual flexibility The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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in meeting spending requirements, whilst continuing to meet the 0.7 per cent commitment over longer-term projects and objectives. 2. Strengthen political oversight of the ODA budget Research suggests that having a political figurehead for the ODA budget helps to protect against misspending (see the Pergau Dam Affair), as well as helping to drive a coherent voice for development across UK government policy. Nor is it a particularly recent phenomenon, with the UK having a dedicated aid minister as early as 1964. As in Canada, the UK should appoint a cabinet-level minister in the FCDO with responsibility for international development. This minister would report to the Foreign Secretary who would have overall responsibility for the department (with the relationship similar to that of the Chancellor of the Exchequer and the Chief Secretary to the Treasury, who both attend Cabinet). The development minister should have a comprehensive grasp on the ODA budget and an awareness of what aid money is being spent by other departments – ODA spending by departments that demonstrably lack expertise in development spending and who perform poorly on transparency indices should be brought into the FCDO. 3. Commit to a long-term strategy for development With an FCDO cabinet-level minister solely responsible for international development, the department should publish a multi-year international development strategy – complementary to the FCDO’s overarching departmental plan, yet separate – that runs beyond the duration of the current Parliament. Such a strategy has been signalled by the Integrated Review in addition to the new strategic framework for ODA, and this strategy should go further than the strategic framework by committing to long-term development objectives – with a renewed and explicit commitment to poverty alleviation – and take account of the multi-year rolling average spending target as proposed in recommendation 1. Because the benefits and results of long-term projects are not always immediately obvious – which has in part contributed to public scepticism of aid – the dedicated development minister should have direct responsibility for the strategy and report The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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annually to Parliament on its progress, making clear how projects are translating into results and in turn how these results will benefit both the UK and the partner country. While the strategy should focus on the objectives of development, the more holistic FCDO departmental plan should include measures to harmonise its bureaucratic culture to avoid the mistakes of similar mergers in Canada and Australia, where development expertise was lost and aid provision suffered as a result. Evidence suggests an overarching strategic vision and a strong commitment to it is key, but there should be additional staff benefits and incentives that make an FCDO civil service job as attractive as any third sector equivalent. 4. Put transparency at the heart of the FCDO’s work DFID was one of the world’s leading aid agencies in transparency, consistently performing highly in transparency rankings, and developing and maintaining the DevTracker which allowed unprecedented insight into departmental spending. The FCO historically performed poorly on such indices. Supported by recommendation 2 (to re-integrate all ODA spending under the FCDO), all UK aid spending bodies should meet the highest standards for transparency and accountability, in line with HM Treasury’s commitment in 2015. Transparent aid spending is a strong defence against criticism from aid sceptics about where the ODA budget is being spent, and is a useful indicator of whether the department is meeting its objectives and priorities. 5. Drive a common global standard around verifying impact of aid programming DFID established the International Aid Transparency Initiative (IATI) which established common standards for financial reporting on development and influenced aid agencies across the world. The FCDO should lead a similar initiative to try to establish common standards of aid impact, capitalising on advancements in technologies that allow the verification of the delivery of an aid intervention, and in some instances the verification of the quality of that intervention (for examples, see section IV).

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6. Champion the role of UK aid In recent years, consecutive governments have been reluctant to champion UK aid and its impact. Incoming Secretaries of State have criticised rather than supported their own departments. The Government should make a full-throated case for an aid policy that pursues enlightened self-interest, championing especially global public health and offering a vision of how this spending helps protect British taxpayers, as well as supporting some of the world’s poorest people. The senior development minister, as proposed in recommendation 2, should act as the Government’s champion of the benefits of UK aid. Crucially, the individual appointed to this portfolio should have a proven track record of aid expertise – either from prior professional experience or through their parliamentary interests – and be prepared to defend the development budget and make a positive case for aid. The Government must lead by example, and the argument in favour of development spending can only be made strongly by a minister whose heart is truly focused on the job and has demonstrated that they care about aid impact. 7. Prioritise global public health The Government has outlined its intention to focus on global public health, most recently in the Integrated Review. This would also be a way to build a strong narrative that will resonate with the British public, particularly in the wake of the COVID-19 pandemic which has highlighted the importance of investing in scientific research and collaborating on health infrastructure at an international level. The Government should focus on specific areas within the arena of global public health including respiratory pathogens, strengthened data and surveillance systems (including for AMR), expanded access to diagnostics, and continued leadership in funding global health research and development. Not only would this cut through positively with the public, it would also provide tangible development benefits both in the UK and for those living in poverty.

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8. Invest in R&D to address market failures and drive a stronger vision for the provision of public goods The UK boasts some of the world’s leading institutions in applied health research, such as the London School of Tropical Hygiene and Medicine, and not least the Jenner Institute at Oxford University which helped develop the Oxford/AstraZeneca COVID-19 vaccine. The power of funding scientific R&D cannot be understated, with the unparalleled speed of COVID-19 vaccine development compared to the rollout of other new health interventions serving as an example. Dedicating a larger proportion of the ODA budget to R&D investment could therefore make a huge difference to the international system. While a focus on global health is sensible, as proposed in recommendation 7, there is no reason why the Government cannot invest in the excellent work of UK institutions in other areas of global public good provision. While the goal of ODA-funded R&D spend should always be for the social good of partner countries, a strong vision for strengthening public goods is also compatible with the strategic interests of Global Britain. Investment in research areas that are underprovided by the market – such as technological solutions to problems in developing countries that can free up governance capacity, or initiatives to make agricultural supply chains more transparent – not only maximise verifiable development impact but complement the FCDO’s focus on good governance and human rights. For example, accurately mapping where rare earths are mined, whether soy products come from deforested areas, or whether clothes are made in factories with unsafe or unsanitary working conditions, is hugely challenging. This prevents the market mechanism from functioning properly and means that efforts to tackle climate change and strengthen global health are comparatively underpowered. The FCDO, with its combination of the aid budget and direct diplomatic interactions with countries where many raw materials are extracted, should consider how it can complement the work of the market and support innovative research solutions in the areas of agriculture, climate, health and governance, such as tracking and monitoring supply chains.

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9. Maintain UK spending through multilaterals Some of the most effective UK-aid-funded entities are multilateral organisations like the Global Fund to Fight HIV/AIDS, TB and Malaria and Gavi, the Vaccine Alliance, and it is through these channels that the UK is able to wield considerable influence and respect on the global stage. The FCDO should use its budget to drive a greater focus on high quality governance and accountability in international institutions, especially in the United Nations. It should also bolster the multilaterals who are struggling to maintain programming in the face of COVID. Additionally, improving standards in global institutions helps to protect the international rules-based system, which is becoming increasingly challenged by aggressors such as China and Russia. The new Biden administration in the United States, with its commitment to multilateralism, provides the UK with a strong co-leader on the global stage to drive co-operation through UN institutions such as the World Health Organisation and the Framework Convention on Climate Change. This opportunity should be seized. 10. Be an exemplary global leader and forge a bold vision for international development for the coming decades The Biden administration has made it clear both in rhetoric and in action that the United States will reaffirm its position as a leader in international affairs and in development – re-joining the Paris Agreement, remaining a member of the World Health Organisation, and promoting the position of USAID Administrator to the National Security Council. With Britain’s greatest ally bolstering the profile of development aid in international strategy, the UK has signalled a retreat by folding its international development department and cutting the aid budget. Despite pressure on public spending due to COVID-19, the pandemic will not last forever – with a willing partner in the United States, now is the time for the UK to seize the initiative and sketch out a bold vision for the post-pandemic global landscape. This could not be more urgent. The pandemic’s impact on global poverty rates has exacerbated a void that will be ultimately filled by one of the competing values in development, and if the UK is committed to being an influential actor then it must champion the international benefits of aid. The alternative is an emboldened China filling this void The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163

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and further disrupting the rules-based system, with its disregard of democracy and human rights when building alliances through financial assistance to lower- and middle-income countries. It would be remiss for the UK to forfeit the soft power that DFID commanded, and this soft power plays a crucial role in the Global Britain strategy. If the UK is to now pursue an ‘enlightened national interest’ vision of international development, it has two avenues to do this: bilaterally, it can continue to work with partner countries to negotiate aid projects that primarily work for the partner country but satisfy the values-based qualifications of Global Britain; multilaterally, it can work with the United States and others through international institutions to cement a liberal democratic framework in the provision of aid, where poverty alleviation plays an important role in promoting a free and open world. To this end, the principle of country ownership continues to have a place in aid provision despite new security considerations risking a pivot towards a more insular and nationalistic UK aid policy.

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Annex 1: Current spending The most recent full-year data on UK aid spending was published in September 2020 at the time of the DFID/FCO merger. It found the total value of UK ODA to be £15.19bn in 2019, split roughly 50:50 between bilateral and multilateral sources, although around 20 per cent of the multilateral funding went to a specific country, for example to Yemen through the World Food Programme. DFID spent over 70 per cent of the total budget with the rest going through other government departments, particularly BEIS (£960m), the Foreign Office (£679m), and the Home Office (£450m). The cross-government Prosperity Fund and the CSSF accounted for close to £850m. Non-DFID contributors spent £1.1bn on bilateral funding, over £800m of which went to middle-income countries. Over £900m was contributed to EU development funds. The top ten countries in recipient of bilateral aid were, in order: Pakistan, Ethiopia, Afghanistan, Yemen, Nigeria, Bangladesh, Syria, South Sudan, DR Congo and Somalia. The breakdown of bilateral spending is as below.

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The multilateral budget included major contributions to funds administered by the EU, and the European Development Fund. Other contributions were as follows:

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Annex 2: The history of UK aid The graphic overleaf charts the history of the UK’s aid spending and policies from 19612020, beginning with the UK joining the OECD Development Assistance Committee and culminating in the merger of DFID with the Foreign Office. The chart maps aid spending in line with governmental and bureaucratic changes, and highlights key moments in UK development history.

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The Project for Modern Democracy Website: www.p4md.org Twitter: @project4md Registered charity no. 1154924 and a company limited by guarantee in England and Wales no. 8472163