The political class seems to have been taken by surprise yesterday with the shock announcement that Boris Johnson is to merge the Department for International Development (DFID) with the Foreign and Commonwealth Office (FCO).
The rumours have been doing the rounds more or less since the Conservatives won the 2019 election. Then, many thought the merger would be announced imminently. An alternative idea was that DFID would become directly answerable to the Foreign Secretary but remain otherwise independent.
The appointment of noted aid-sceptic Anne-Marie Trevelyan to DFID in January did not ease the worries of those concerned about the future of the department. Whilst the department had received a stay of execution, its future remained in doubt.
It had otherwise been clearly drawn into the FCO’s orbit, with all ministers of the department being joint with the Foreign Office for the first time. DFID country directors also then began reporting directly to each country’s ambassador or high commissioner, rather than DFID itself.
Now, at long last, it seems DFID’s state of limbo is to be ended. The department will be wrapped into a beefier Foreign, Commonwealth and Development Office. Details, however, remain sparse. This begs the question, what form could this merger take?
Although DFID generally has a good reputation amongst the international development community, the truth is that it doesn’t reflect best practice. Of course, the aid establishment is delighted to have a department all to itself in Britain.
As we’ve long argued, this doesn’t justify keeping a separate aid department. Britain is actually the only country in the OECD that has an independent department responsible solely for international development.
The likely option given the Prime Minister’s statement is to recreate the Overseas Development Administration (ODA) or a similar in-house agency. This is how UK aid was managed from 1970 to 1997. The ODA was a department within the Foreign Office and overseen by its own minister.
This way, the FCO would become responsible for both policy and implementation of the UK’s aid strategy, but some separation between normal FCO activities and international development would remain.
That would retain the strengths of DFID, especially the transparency it brings to aid spending. This model is replicated in many like-nations, such as Australia, Canada and New Zealand, which the prime minister noted in his statement yesterday.
However, the ODA was not without its flaws. In the ‘Pergau Dam affair’ in the late 1980s and early 1990s, the government agreed to build a dam in Malaysia in return for a major arms deal. This became a public scandal and ultimately sounded a death knell for the ODA which was succeeded by DFID just a few years later.
In an effort to avoid repeating the mistakes of that embarrassing episode, DFID committed commendably to transparency about how cash was being spent. This is a trait any successor organisation must inherit.
Another option would be to create a quango responsible for implementing development programmes with the FCO directing policy from above. This is the model most common in Europe and in the United States, but it seems unlikely to be the route government would wish to take.
A significant incentive for the merger is to allow for more strategic and coordinated use of foreign aid, in a way that is more compatible with the UK’s wider foreign policy approach. An autonomous development agency could make this more difficult than the present and so flies in the face of the prime minister’s ambitions.
There are also concerns in government that DFID may already be unduly influenced by many giant international development NGOs, the so-called ‘aid cartels’ which dominate the sector – something which is unlikely to be mitigated by turning DFID into a quango.
If the merger breaks UK aid’s dependence upon these cartels, smaller and more efficient charities could benefit, allowing for greater diversification and more efficient use of urgent aid cash. This is something the now-Home Secretary, Priti Patel, called for in a TaxPayers’ Alliance report.
A third option would be to have the Foreign Office handle international development directly, without the creation of a new in-house agency like the ODA or a quango. This is a relatively uncommon model that, within the OECD at least, is only used by Denmark and Norway.
The advantage of this is that it would allow for a complete merger of FCO and DFID activities, ensuring aid really does become a fully embedded pillar of British foreign policy. This could see the dividing line between international development and wider foreign policy disappear as Britain begins using its foreign policy tools in complete concert with one another.
Most importantly, it is here where the greatest savings for taxpayers can be found. The hard truth is that, as far as the public is concerned, those savings are all that matter. Most taxpayers could not give a stuff who wastes the cash – they just don’t want it wasted in the first place.
Irrespective of what form this new ‘super-department’ takes, it must ensure it learns the lessons of the past. It must be transparent and prove that the aid budget is being spent appropriately. There can be no repeat of the Pergau Dam affair. It needs to break free from the blob of NGO aid worthies who have captured DFID and are demanding more and more cash to finance their operations.
It must ensure that the UK’s aid strategy has a clear line of accountability and direction, with the foreign secretary held responsible for each wasteful aid project. Most of all, it should also ensure money is not frittered away on wasteful pet projects which have proven so unpopular in recent years.
Going forward, further attention must be focused upon the efficacy of the 0.7 per cent spending target. Since its implementation, it has been very unpopular with voters. TaxPayers’ Alliance polling found consensus on this across all voters for a re-allocation of aid spending.
It promotes pointless projects, guarantees waste and locks in an institutional arrogance of a never-ending ‘cashpoint in the sky’, as the prime minister put it. Ultimately, the target must be scrapped.
In the meantime, the government should continue to review how things can be improved. A simple step in the right direction would be to stop planning aid spending according to the calendar year, but according to the financial year, like every other government department (and crucially, the FCO).
The government should also embrace the flexibility within the International Development Act 2015 and allow aid spending to fluctuate depending upon the UK’s economic circumstances. In the case of substantial economic shifts – like the current one – the letter of law allows the government to temporarily ignore the 0.7 per cent requirement.
It should certainly do so, at the very least until the merger is complete, transparency requirements are in place and the economy has started to recover. The world has changed a lot since 1997, and it’s about time aid policy changed too.
