Department for International Development Annual Report and Accounts 2012-13

This is our annual report into the Department for International Development’s (DFID)

expenditure and administration, looking at 2012-13. On expenditure, we note that DFID’s spending on humanitarian assistance increased significantly. In part this has been possible because of the very large increase in the aid budget in 2012-13, which will not be repeated in future years. We recommend that DFID do not provide funds to support disasters in middle income countries by raiding bilateral development programmes in low income countries. Other wealthy OECD countries must play there part in providing humanitarian assistance. We recommend that DFID set out annually its provisional budget for humanitarian relief, what is held as contingencies for unpredictable events and how it will be deployed if not called upon.

Bilateral expenditure on low-income countries is currently significantly lower than in 2010-11 as result of the reclassification of certain formerly low income countries as middle-income. We recommend that the percentage of income spent in low income countries rise over time provided they are capable of absorbing it. There has also been a decline in DFID’s spending on budget support. We recommend that DFID assess the consequences of this decline, examining in particular the effect on countries’ capacity to provide basic services and on donor coordination.

A very large part of DFID’s bilateral expenditure is spent through multilaterals and private contractors. Despite a small decline in 2012-13, spending through multilateral organisations remains the largest element of DFID’s bilateral programme at £1,075 million.

DFID has put in place a number of changes to improve the value for money provided by spending through multilaterals and contractors; we recommend it monitors and reports to the Committee whether these changes have been effective.

Contractors are critical of DFID’s management of its programmes. We welcome the measures taken to make improvements; we recommend that DFID report to us on their effectiveness. We recommend that policy advisers work more closely with programme managers and take more responsibility for the management of programmes.

As part of its improvements to programme management, DFID is reviewing its tendency to ‘gold-plate’ business cases. We welcome DFID’s acknowledgement of this tendency. We recommend that the Secretary of State review her decision to examine all business cases over £5 million. We further recommend that DFID staff spend less time writing the perfect business case and more in assessing which areas to allocate funds to and in monitoring the implementation of programmes.

DFID has low administrative costs compared to other development organisations. This is not in itself a virtue. DFID must continue to assure itself that the low costs are a result of its efficiency, not because it is failing to do the job properly or sub-contracting work which would be better done in-house.