Source · Select Committees · International Development Committee
7th Report – Assessing Value, Ensuring Impact: The FCDO's Approach to Value for Money in Official Development Assistance
International Development Committee
HC 422
Published 29 October 2025
Recommendations
3
Accepted in Part
Publish detailed guidance for FCDO staff and partners on conducting VfM assessments, prioritising equity.
Recommendation
Alongside a clear VfM strategy and framework, the FCDO should publish detailed and practical guidance for its staff and partners on how to approach and conduct VfM assessments, particularly in respect to equity, ensuring that programme activities address the needs …
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Government Response Summary
The government partially agrees, committing to update its internal PrOF Guide on Value for Money (VfM) for staff in 2026 and publish a version for external partners. It will also produce a specific internal 'Equity and VfM' guide for staff.
10
Rejected
Require Government to return ODA spending to 0.5% GNI with a clear rebuilding schedule.
Recommendation
The Government must make every effort to return to spending 0.5% of GNI on ODA at a minimum, as soon as possible. The Government should produce a clear schedule for rebuilding aid from the interim level of 0.3%, with defined …
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Government Response Summary
The government explicitly rejects the recommendation to return to 0.5% ODA, stating its commitment is to 0.7% when fiscal circumstances allow, and notes these conditions are not expected to be met within this Parliament.
11
Accepted
Publish annual impact assessments for ODA cuts, detailing rationale and alignment with aid objectives.
Recommendation
We recommend that the Government commits to publishing an impact assessment for every year in which cuts to ODA are implemented, including the 2026/27 financial year, and providing rationale for how these decisions align with the impact that UK aid …
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Government Response Summary
The government agrees and plans to publish the impact assessment for ODA cuts following the finalisation of ODA programme allocations.
14
Rejected
Cap Home Office in-donor refugee costs at a fixed percentage of total ODA.
Recommendation
The Government should consider that Home Office in-donor refugee costs should be capped at a fixed percentage of total ODA spend to protect a rapidly diminishing envelope of funding. This should include formal review points if projections breach 80% of …
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Government Response Summary
The government explicitly rejects the recommendation for a cap on Home Office in-donor refugee costs, stating the FCDO's ODA budget is no longer automatically exposed and measures are in place to reduce asylum costs.
19
Accepted
Initiate new multilateral aid review by 2025/26 to assess ODA value for money and impact.
Recommendation
We recommend that the Government conducts a new multilateral aid review of its current ODA spending to ensure that VfM is being achieved by the end of the 2025/26 financial year. This should include: a. An evaluation of the most …
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Government Response Summary
The government disagrees with conducting a new multilateral aid review, stating that FCDO funding to multilateral organizations is already regularly scrutinized through existing processes like PrOF, Central Assurance Assessments, and Spending Review evaluations.
21
Acknowledged
Prioritise localised interventions for specific challenges to maximise ODA value for money.
Recommendation
The Government must prioritise localised interventions for context-specific challenges, including poverty reduction and community health. Given a reduced ODA budget, these interventions should be targeted towards areas with the highest level of impact to maximise VfM and fulfil the globally …
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Government Response Summary
The government agrees to prioritize localized interventions, stating that country-led, context-specific partnerships are central to its bilateral offer and that it remains committed to the Grand Bargain and advancing locally-led development.
23
Accepted in Part
FCDO is not fully leveraging philanthropic power, requiring improved engagement.
Recommendation
Philanthropic organisations have considerable power that the FCDO is currently not wielding to its maximum impact. Whilst the Government must be aware of the risks and implement mitigations where possible, there are compelling reasons for the Department to improve engagement …
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Government Response Summary
The government partially agrees on the importance of philanthropic partnerships, stating it is committed to deepening these, has convened strategic roundtables, and is proactively assessing ways to systematically partner, including through strategic dialogues.
24
Accepted in Part
Convene regular strategic dialogues with philanthropists and development foundations for aligned work.
Recommendation
We recommend that the FCDO convenes regular strategic dialogues with philanthropists and development foundations to ensure that work can be aligned and complementary, and to encourage knowledge sharing. (Recommendation, Paragraph 75)
Government Response Summary
The government partially agrees, noting it already convenes strategic roundtables with philanthropists and is proactively assessing ways to systematically partner, including by convening strategic dialogues to align work and share knowledge.
33
Accepted in Part
Establish FCDO business hubs in partner countries to support smaller organisations with MEL requirements.
Recommendation
Wherever possible, the UK should support smaller organisations in MEL processes without placing unrealistic expectations on the level of data and reporting they are able to provide. Whilst we recognise and agree that MEL is vital for ensuring VfM, this …
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Government Response Summary
The government partially agrees, committing to ensuring MEL requirements do not create barriers for smaller organisations through proportionate application and forthcoming guidance updates. However, they do not accept the recommendation to establish business hubs, deeming a one-size-fits-all approach inappropriate.
34
Accepted in Part
Standardise MEL reporting requirements for ODA programming across government departments under FCDO oversight.
Recommendation
To enhance the effectiveness and accountability of UK ODA spending, we recommend that MEL reporting requirements of ODA programming should be standardised across all Government departments. In line with our recommendation in Chapter 2, the Second Permanent Under-Secretary at the …
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Government Response Summary
The government partially agrees, noting existing cross-government guidance supports consistent MEL standards and that a refreshed ODA Delivery and Impact Board will improve data sharing and alignment across government. However, they do not fully commit to standardising all reporting requirements nor to the specific oversight role recommended, maintaining decentralised decision-making.
Conclusions (28)
1
Conclusion
Rejected
DFID was a global leader in its approach to value for money (VfM), and the Committee are pleased to hear that some of the core foundations of DFID’s framework have transferred into the FCDO. However, it is concerning that there is very little publicly available information on the FCDO’s current …
Government Response Summary
The government disagrees with the concern, stating that its Programme Operating Framework (PrOF) and internal PrOF Guides already provide rules and guidance on Value for Money (VfM). It plans to update existing guidance, share good examples, and roll out VfM training for staff instead of creating a new strategy.
2
Conclusion
Rejected
The FCDO must publish a clear strategy and framework regarding its approach to VfM, as had previously been done by DFID and other Government departments. This should include: a. A clear definition of VfM; b. The FCDO’s core VfM principles; c. How the FCDO assesses VfM against its core principles; …
Government Response Summary
The government rejects the recommendation to publish a new, clear Value for Money (VfM) strategy and framework. It asserts that existing documents like the Programme Operating Framework (PrOF) and PrOF Guides already cover these aspects, and it will focus on updating this existing guidance.
4
Conclusion
Accepted in Part
The Committee is disappointed to note that per the FCDO’s current published definition of VfM in its Programme Operating Framework, the department frames VfM in the context of value to the taxpayer, not improving the lives of those in poverty. Whilst accountability to the taxpayer should be a key facet …
Government Response Summary
The government partially agrees, committing to update its Value for Money (VfM) guidance in 2026 to communicate more clearly the basis on which VfM is assessed. However, it clarifies that, in practice, its ODA expenditure assessments already focus on the impact on those living in poverty.
5
Conclusion
Accepted in Part
It is essential that the FCDO makes it clear in all strategy frameworks and guidance documents that improving the lives of those in poverty is the core principle of the FCDO’s approach to VfM. All economy, efficiency, effectiveness and equity assessments must be explicitly considered against this principle. (Recommendation, Paragraph …
Government Response Summary
The government partially agrees, stating it will update its Value for Money (VfM) guidance in 2026 to more clearly communicate to staff and partners that improving the lives of those in poverty is a core principle, while affirming that current assessments already align with this objective.
6
Conclusion
Accepted in Part
Sustainability is essential for ensuring that programmes have a long- lasting impact after a programme has ended. Despite broad recognition of the importance of sustainability, the FCDO is yet to formalise this within its VfM criteria. This should not just be an informal consideration within VfM assessments, but should mandatorily …
Government Response Summary
The government partially agrees, stating sustainability is already integrated into its VfM approach but will develop refreshed VfM guidance in 2026 with a stronger focus on assessing sustainability at each stage.
7
Conclusion
Accepted in Part
The Committee recommend that sustainability should be a named central tenet of the FCDO’s VfM assessment criteria by the end of the 2025/26 financial year, and should be regularly and formally considered throughout the life of a programme. (Recommendation, Paragraph 29) The international development landscape and the UK ODA’s reduction …
Government Response Summary
The government partially agrees, stating sustainability is already integrated into its VfM approach and that refreshed VfM guidance will be developed in 2026 to strengthen its assessment, but does not commit to making it a named central tenet by the specified deadline.
8
Conclusion
Rejected
The UK’s planned reduction of ODA spend from 0.5% to 0.3% of gross national income will have devastating consequences across the world. The Committee recognises that increased defence spending is needed and is to be welcomed. However, to do this at the expense of the world’s most vulnerable undermines not …
Government Response Summary
The government disagrees with the conclusion, reiterating its commitment to returning to 0.7% ODA when fiscal circumstances allow, based on OBR forecasts, and notes these conditions are not met within this Parliament.
9
Conclusion
Rejected
Guaranteed, long-term funding for programmes is essential for ensuring that VfM is achieved, and that the impact of FCDO work continues to be felt long after the end of a programme. In the last five years, the UK has significantly cut its aid budget twice—damaging not just its international reputation …
Government Response Summary
The government disagrees with the conclusion, reiterating its commitment to returning to 0.7% ODA when fiscal circumstances allow, based on OBR forecasts, and notes these conditions are not met within this Parliament.
12
Conclusion
Rejected
The Committee notes the continuing badging of high levels of Government spending on refugee costs within the UK as ODA with dismay. Whilst the Spending Review commits to ending the use of asylum hotels in this Parliament, the level of the UK’s in-country support for the poorest people in the …
Government Response Summary
The government disagrees, stating the FCDO's ODA budget is no longer automatically exposed to in-donor refugee costs and that measures are being taken to reduce asylum costs to ensure more ODA can be spent on overseas development.
13
Conclusion
Rejected
Whilst the Committee recognises that in-donor refugee spend is allowable under DAC rules, in a world of rapidly decreasing aid budgets it is not in the spirit of what ODA should be used for, which per the OECD is spending that promotes and specifically targets the economic development and welfare …
Government Response Summary
The government disagrees, stating that the FCDO's ODA budget is no longer automatically exposed to in-donor refugee costs and measures are being taken to reduce these costs, thereby allowing more ODA for overseas development.
15
Conclusion
Rejected
The FCDO must make formal representation to HM Treasury that any unspent ODA allocated to other Government departments is channelled back through the FCDO to continue its vital humanitarian and development work, and to ensure that overall ODA spending does not fall even further to below 0.3%. This representation must …
Government Response Summary
The government rejects the recommendation, explaining that ODA Department Expenditure Limit totals will no longer be adjusted for GNI fluctuations, meaning the FCDO's budget is no longer automatically exposed to other department's spending, thus providing greater predictability.
16
Conclusion
Rejected
VfM approaches differ between Government departments, including in relation to ODA spend. The Minister’s announcement that the FCDO have been granted a greater leadership position in the way that ODA is spent across Whitehall is an opportunity for the FCDO to exert its leadership on all departments spending ODA and …
Government Response Summary
The government disagrees with the premise that the FCDO should exert leadership over other departments' ODA spend, stating that individual departmental Secretaries of State remain accountable, and the Minister for Development already provides cross-government oversight.
17
Conclusion
Rejected
Achieving VfM for every pound of ODA is now more vital than ever, and it is essential that one consistent framework is applied across all aid spending. Given that the FCDO is the largest administrator of ODA, its published framework, in line with our recommendation in Chapter 1, should be …
Government Response Summary
The government disagrees with applying one consistent VfM framework across all aid spending and formal oversight by the FCDO's Second Permanent Under-Secretary, stating that departmental Secretaries of State are individually accountable for their department's spending.
18
Conclusion
Accepted
We recognise that multilateral organisations can offer good VfM in many circumstances. However, it is concerning that the FCDO has not commissioned a review of its multilateral aid spend since 2016, despite £2.8 billion of core ODA funding being spent through multilaterals in 2024. (Conclusion, Paragraph 58)
Government Response Summary
The government disagrees with the concern, stating that multilateral aid spending is regularly scrutinized through various internal processes (PrOF, Central Assurance Assessments) and external assessments (MOFAN), and is evaluated during Spending Reviews.
20
Conclusion
Acknowledged
The Government has ambitious and earnest intentions for championing locally-led solutions. However, there is a significant risk that these ambitions could be lost amidst financial pressures, in favour of centrally managed programmes, and that the VfM benefits that localisation can offer will be lost. (Conclusion, Paragraph 66)
Government Response Summary
The government agrees with the observation, affirming its commitment to country-led, locally-led development partnerships and the Grand Bargain, recognizing their importance for value for money and effectiveness.
22
Conclusion
Accepted in Part
The Minister for International Development must ensure that there is coherence across the department in respect of promoting locally-led programmes and ensuring they deliver good VfM. This should include prioritising the development of a local leadership strategy as a cross- departmental piece of work that places lower- and middle-income countries …
Government Response Summary
The government partially agrees, stating it has added ‘locally led’ as a principle in the refreshed PrOF and will provide detailed guidance, indicating local leadership as an organizing principle but not explicitly committing to a new cross-departmental strategy.
25
Conclusion
Accepted
The FCDO’s use of private contractors is not inherently poor value for money. However, the published organisation and activity data of all implementing partners, including private contractors, is often incomplete and obscure. This exposes every pound spent to a higher risk of under-delivering impact. (Conclusion, Paragraph 87)
Government Response Summary
The government agrees that implementing partner data is incomplete and commits to improving IATI publishing by encouraging compliance, reviewing its approach to increase publishing while reducing administrative burden, and working with IATI to streamline the process.
26
Conclusion
Accepted in Part
It is essential that the FCDO requires all of its contracts with private contractors to adhere to the International Aid Transparency Initiative, not just most, to ensure that all implementers of UK ODA are held to the same transparency and accountability standards. (Recommendation, Paragraph 88)
Government Response Summary
The government agrees more can be done to improve IATI publishing and is reviewing its approach to partner publishing, aiming to increase the proportion of partners that publish data while streamlining the process. However, they acknowledge challenges with sensitive data and financial burden for implementers, not fully committing to requiring *all* contracts to adhere.
27
Conclusion
Accepted
The FCDO must make every effort to improve the transparency of the data it collects on its engagement with contractors and operating partners. The information that is required of organisations to report through IATI must be published in a way that is clear, user-friendly, and complete. (Recommendation, Paragraph 89)
Government Response Summary
The government agrees and is committed to ensuring data is published clearly and user-friendly. They will continue to evolve DevTracker based on user feedback and work with the IATI community to improve data accessibility on D-Portal.
28
Conclusion
Rejected
We are concerned about the potential loss of expertise within the FCDO as a result of engagement with private contractors, particularly where contracts have been ongoing for many years, where in-house expertise could have instead been used. (Conclusion, Paragraph 90)
Government Response Summary
The government disagrees with the committee's concern, stating that existing robust governance, performance reviews, and contract management processes already provide sufficient oversight and accountability, thereby preventing loss of expertise.
29
Conclusion
Rejected
The FCDO should perform an audit of all individual private contractor engagement longer than 12 months or approaching renewal. This must assess whether extended tenures align with performance outcomes and original mandates, with findings with clear recommendations for terminations or formal renegotiations to be escalated to senior leadership. (Recommendation, Paragraph …
Government Response Summary
The government rejects the recommendation for an audit, stating that existing robust governance, performance reviews, and contract management processes already provide sufficient oversight and accountability, making additional audits unnecessary.
30
Conclusion
Acknowledged
We have been glad to hear that there is a stronger evaluation culture in the FCDO than can be seen in many other Government departments, and that the FCDO’s monitoring, evaluation and learning (MEL) processes are strong in comparison to other international actors. There has been a clear continuity of …
Government Response Summary
The government acknowledges the committee's positive assessment, agreeing that the FCDO is a world leader in Value for Money (VfM) and has maintained the strong legacy of monitoring, evaluation, and learning processes from DFID.
31
Conclusion
Accepted
It is also positive that the FCDO recognises that the lack of data in many of the contexts it operates in means that some quantitative metrics are not possible or of good quality, and offers flexibility around this for operating partners. (Conclusion, Paragraph 101)
Government Response Summary
The FCDO partially agrees with the conclusion, stating it is committed to ensuring MEL requirements are proportionate and will reinforce this approach through forthcoming guidance updates and programme performance reviews.
32
Conclusion
Accepted in Part
Whilst the FCDO’s strong MEL processes help to ensure that programmes are delivering VfM, these expectations increase administrative demands on organisations delivering these programmes. This may lead to smaller NGOs not applying for programme funding. (Conclusion, Paragraph 102)
Government Response Summary
The government partially agrees, acknowledging the need to ensure MEL requirements do not create barriers for smaller organisations. They commit to forthcoming updates to MEL guidance and programme performance reviews to reinforce a proportionate approach, and will work to eliminate obstacles for local actors.
35
Conclusion
Rejected
As a global leader in promoting VfM across development spending, it is vital that the FCDO protects its MEL budget. MEL should not be optional; it is a core function that underpins effective, accountable and adaptive programming. Without appropriate and complete MEL in place, the VfM of FCDO programmes cannot …
Government Response Summary
The government disagrees with the implied recommendation to protect MEL budgets or ringfence MEL spend. They state that ringfencing is inappropriate as FCDO needs flexibility to prioritise resources, though they remain committed to proportionate and strategic MEL and will make monitoring mandatory.
36
Conclusion
Rejected
It is essential that the FCDO ringfences MEL spend within programme budgets and protects these throughout the reduction of ODA to 0.3% of GNI. Further cuts to MEL threaten to undermine the very assessments that sustain the accountability and impact of all FCDO work. (Recommendation, Paragraph 109)
Government Response Summary
The government rejects the recommendation to ringfence MEL spend within programme budgets, stating it is not appropriate in the current fiscal landscape as FCDO requires flexibility to prioritise resources. They remain committed to proportionate and strategic MEL.
37
Conclusion
Accepted
It is concerning that Programme Managers do not feel valued within the FCDO, a problem compounded by capacity issues and higher expectations than made of counterparts elsewhere in Government. Despite the Minister’s assurances that the FCDO recognises the importance of management, we are sceptical that measures such as mandatory training …
Government Response Summary
The government agrees with the committee's concern regarding programme manager workload and feeling undervalued. They are addressing this through the FCDO2030 initiative, which includes aligning workforce plans, investing in professional development, expanding expertise access, and providing qualifications and new support models for programme managers.
38
Conclusion
Accepted
The FCDO must make every effort to ensure that its staff feel valued and appreciated within the organisation, particularly amidst budget insecurity. The Committee recommend that the FCDO commissions a rapid capacity assessment, and recruit or offer secondments to additional specialists to relieve overworked Programme Managers, rebalance workloads and bring …
Government Response Summary
The government agrees and is addressing staff value and workloads through FCDO2030 initiatives, including workforce planning, professional development, agile deployment models, and embedding advisors for program leadership. These actions aim to strengthen project delivery and provide surge support.