​Chair: Ann Grant, ODI Board Member

Speakers:

- Erik Solheim, Chair of the OECD DAC

- Mark Lowcock, Permanent Secretary for DFID

- Sir Malcolm Bruce MP, Chair of International Development Committee, House of Commons

- Simon Maxwell, Senior Research Associate ODI

The launch will be followed by a networking event.

​The launch of the OECD DAC peer review of the UK development cooperation system was hosted by ODI. The event was chaired by Ann Grant (ODI board member) who was formerly a British diplomat and the Vice Chairman Africa at Standard Chartered Bank.

- Erik Solheim (OECD-DAC, Chair) kicked off the discussion with a brief overview of the report’s main findings. Overall, the UK is doing very well and as a key development player, should encourage other donors to follow its path. He praised the UK in particular for having a unique intellectual environment around development ranging from fantastic institutions, to a wide variety of intellectual institutions and strong NGOs. He also emphasised the UK is the 2nd largest aid provider in the world and has reached the 0.7% target (enshrined into legislation that very day). Erik Solheim recognised this remarkable achievement in particular at a time of economic difficulties. He said this was made possible by political will and leadership within government around the double argument that development assistance is a matter of solidarity but also a tool for foreign policy. Finally he also pointed to the quality of UK aid spending, of the systems in place and of the strong focus on poverty.

However, Erik Solheim also noted the peer review makes some criticisms and focused on four issues. First, he called for the adoption of an overall strategy through a wider white paper that covers UK policy areas going beyond development to include things like environment, trade, migration… Second, while he recognised that producing and achieving results is crucial, he warned against too much bureaucracy in the constant search of value for money that can turn into a burden to achieving results. Third, he mentioned there is a fine line between leading by example and arrogance and that while the UK is particularly well suited to provide international leadership in the field of development it is also important to listen to others. There is a risk the UK feels it knows better and it comes across as arrogant. Finally, Solheim shared his personal surprise at the UK’s limited engagement with the private sector in development programmes while it tends to be one of the most market-oriented countries among EU countries. Whereas countries like France and Germany which are much more state-oriented, have developed mechanisms to use the private sector.

- Mark Lowcock (Permanent Secretary, DFID) noted the value of reviews but also said with a note of humour he did not feel under-scrutinised at DFID with scrutiny from the IDC committee in Parliament, the National Audit Office or ICAI at the national level in addition to the useful challenge provided by NGOs, think tanks and academics. He highlighted that the DAC peer review is distinct in three ways: it is comprehensive and looks at the whole development agenda across government and beyond; it is conducted by peers it is very different to be reviewed by your counterparts; and, it is rigorous and regular, allowing you to go back to previous reviews and observe evolutions over time.

Mark Lowcock qualified the peer review conclusions as fair. He was pleased to see recognition on the UK’s leading role, its poverty focus, its institutional arrangements including the role of the National Security Council, the fact the Secretary of state is a member of cabinet. However, he recognised that if you’re regarded as doing a good job, the biggest danger is complacency.

He responded to Erik Solheim’s criticisms. On the need for a clearer forward agenda, he announced Justine Greening’s speech setting out what the government has done against its announcements in 2010 and providing some thoughts on the future agenda. On results, he agreed that there was a lamentable under focus on that before 2010, but that there is a risk of over doing it. He said he was keen to ensure we count what can be counted without pretending everything that matters can be counted. He recognised that there is a need to listen and learn as power is more diffuse and collaboration is of growing importance from other donors but also beneficiaries in the world today. Finally, he agreed the UK should do more with the private sector and this would be music to the ears of the current government.

- Sir Malcolm Bruce (Chair of the International Development Committee, House of Commons) commented on the points made by the other speakers in light of the IDC’s own work. With regard to having an agenda toward the private sector, he said changes were needed in this area as countries that have lifted their people out of poverty like China have been able to do so thanks to their dynamic private sector. So the question is: how can donors help create similar conditions in developing countries? On DFID’s poverty focus, Sir Malcolm Bruce referred to an IDC report on the future of development finance calling for a move away from concentrating simply on delivering grants so as to include instruments which use returnable capital. On developing an overall vision for development and given the post-2015 process, he thought the question should be around what this means for the UK level and what we will the 0.7% be used for. In reference to the new legislation making 0.7% an obligation, Sir Malcolm Bruce said that political will matters more than what is in laws. Sir Malcolm Bruce highlighted the need for more cross government policy coherence and recognised instruments like the NSC, conflict pool, or the experience in Sierra Leone have contributed toward that. However, he suggested this could be done more systematically and there should be more thought and challenge going to other government departments. Finally, he said the UK was a great supporter of a world where no one is left behind in 2030 and the 0.7% commitment should be met by everybody to make that happen. It should go toward global public goods like health, security, influencing migration, things that benefit everybody. ‘What we can do with 0.7% can be transformational’.

- Simon Maxwell (Senior research associate, ODI) identified a series of questions emerging from the peer review as described in his blog. Does the UK know where it is going on global development? He described this as a fascinating question for current and future ministers and a question the select committee spent some time addressing. How well does the UK handle big cross-cutting issues across government e.g. fragile states, global public goods… Is having a separate department for international development the organisational structure to do that? Why does no other country in the world have such a system? The DAC review concluded that DFID is good tactically but not strategically i.e. the girls summit and engagement on female genital mutilation were great successes for example but on a whole range of issues about how the global economy works, on migration, drugs, tax, transparency or illicit financial flows, not enough is being done. How should this be handled in the future? Some countries have PCD reporting systems or parliamentary rapporteurs on PCD for example. The UK government could up its game in this area.

Is DFID gummed up by targets, procedures and transactions costs? On the burden and transaction costs associated with the results framework and the ensuing business cases and log frames, DFID has gone through a simplification procedure with the Smart rules so the problem may be about to be sorted. Robert Chambers makes the case about the very high costs these have had including for recipients on the ground.

Has DFID over-reached itself as a knowledge-led organisation? A lot of the big questions are about global public goods. DFID should not apologise about investing in research. The challenge is to make ICAI, NAO, IDC and the DFID evaluation unit work together. The revision of ICAI’s work is good news in that respect.

Simon Maxwell also touched upon the following issues: The UK needs to have the right skills, i.e. DFID needs skills in delivering aid but also in brokering deals. There is a challenge in terms of what comes after the elections. The 2002 and 2006 Development Acts are no longer fit for purpose. The overarching poverty focus should be extended across government and not only targeted at DFID. The 2006 Act is too MDG specific and will need to be updated in view of the post-2015 discussions. DFID needs a wider mandate across Whitehall, it needs a new set of instruments e.g. impact reviews, spill over analysis to have the authority to intervene in policy at right money. There are big changes underway with the development agenda; an obvious vehicle to reflect these would be to have a new white paper but it is sensible to wait until early 2016. Tackling this new agenda will require a DFID that is very different from its current form. The radical agenda in the next 40 years is not only about aid.

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Before opening the discussion with the audience, the chair asked each of the panellists for their views on the strategic relationship between DFID and other departments. How can you get cross departmental work to be more effective as we move in a beyond aid agenda?

Mark Lowcock questioned the premise of the question and comments made by other speakers. He clarified that the construct in government is not that DFID is supposed to deliver on development alone. The government sets out its overall external strategy through the NSC where development challenges are discussed and then a variety of government bodies have a responsibility to respond. Over the last decade, there has been a broadening of responsibility of government departments other than DFID, including the Prime Minister’s strong personal role in the development agenda. The Future government will decide on the relative role of DFID vs the rest of the government but the construct has not been that development is only DFID’s job. Structures and processes have been put in place to reinforce that.

Erik Solheim emphasised the importance of leadership over systems. He stressed that making sure the next Prime Minister has development high on his agenda will be crucial. He noted that in Europe, many PMs never give a thought to development and that it does not get integrated in the wider government policy. The UK will also need a strongly dedicated secretary of state. This is another issue, development ministers across donors tend to last no more than 2 years which is very little to familiarise one’s self with the issues or to build relationships with partners and counterparts. He concluded saying leadership is absolutely key, if you get this wrong, you cannot replace it with good systems.

Sir Malcolm Bruce noted that the way Parliament and government work is through operating silo ministries. The IDC committee has oversight over DFID only. For example, when carrying out the beyond aid enquiry, the committee asked the National Security Council adviser to give evidence and he declined even though the NSC is the area where policy coherence should be manifested. He agreed with the points made by the other speakers that political will and leadership are more important than structure but he also stressed that having the right to get evidence from different departments would help the committee’s work. At present, ministers are only required to reply to their own committee.

Simon Maxwell suggested getting cross departmental work would not mean DFID does everything. The issue would be for DFID to make sure that things are getting done on the ground and that they are done in a coherent and consistent way.

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The floor was then open to the audience for a discussion which covered:

Finding the right balance in terms of payment by results as impact is not only dependent on the quality of a project or a service provider but is also influenced by the political or security context for instance. To do this, you need to have a better way of thinking about whether you’re achieving what you want to achieve rather than simply being paid for the time you are spending to do this. You have to be more rigorous about whether tax payer’s money is doing what you want it to do. This should not mean that you stop engaging in difficult contexts. You should measure on the basis of conditions in which you intervene.

Is the possibility of DFID being merged back into the FCO is a likely one? It could be very damaging as foreign and trade interests would probably take over development interests. The overwhelming evidence provided to the IDC committee in its inquiry was in favour of keeping DFID outside the FCO. However, different models and leadership are key to adapt to the changing development landscape. DFID’s geographical and policy boundaries are problematic if you are moving toward a beyond aid agenda. If you are serious about tackling climate change for example, you have to look toward richer countries.

What role does DFID have in ensuring that the private sector leads to sustainable development and does not have a damaging role? Capitalism is not necessarily harmful for everything but it must be regulated. The issue is about the types of standards you set and from that you can extrapolate different ways of approaching the private sector that lead to sustainable development. A key imperative in this area is making sure people and companies, international and domestic, pay their taxes. Some 600 million young people will come on the job market in the next 10 years around the world. What we need is to get the right private sector rather than demonising it.

Dangers of financialisation: are we not exposing countries even more to a financial system that remains volatile and predatory? The worse thing about the global financial system is being excluded from it. Donors must help build capacity for developing countries to engage in the system in a way that will help with their development. The UK government has put in place capacity building projects on tax policy and a peer to peer collaboration was set up with HMRC.

The problem with the risk focus is that aid cannot support small business as two out of three small businesses fail on average. Those who succeed however are the ones that create jobs. The risk focus means that DFID cannot provide credit guarantees and other such tools that small businesses need. Perhaps this is not communicated well enough but DFID does have a broad set of instruments aimed at SMEs including credit guarantees. This question also goes beyond ODA as other sources of finance for development will grow much faster. It is important to think about what our wider offer is and what opportunities this raises. On non-grant instruments: 0.7% is too small so you have to think about the other 99.3% and about creating arrangements in the ODA system that incentivise greater activity on things like guarantees, PPPs, FDI etc. where the big prize is in terms of finance. The IDC committee had suggested creating a development bank in one of its reports, this would lead to having the right knowledge and mix of instruments.