Managing reductions in Official Development Assistance spending

FCDO and HM Treasury (HMT) should identify lessons learned from the 2021 budget allocation exercise. While the extent of the 2021 budget reductions was unusual, it will still be useful to draw out lessons from the approach, and from the previous exercise in 2020, to help inform ongoing allocations activity.

FCDO and other ODA spending departments should assess the impact of the reduction and reprioritisation of ODA spending on performance in the short, medium and long term. This should include, but not be limited to, a focus on the impact on bilateral spending, which has to date been affected the most by budget reductions. Among other things, departments should consider how the proposed return to a 0.70% target might help them address any issues that are identified.

FCDO and HMT should work with other ODA spending departments on scenario planning for a return to 0.70%. One scenario already set out is a potential return to 0.70% in 2024-25, but there may be others to consider. As part of this exercise, FCDO and HMT should review their approach to managing
changes in GNI forecasts and consider the impact of greater flexibility in the target for ODA spending.

Given the intended return to a 0.70% target, FCDO and HMT should maintain oversight of individual ODA spending commitments for future years and use
this information to ensure future budgets are not over-committed ahead of time. Central oversight is important in the context of a fixed spending target
and a possible increase in spending in future years. This is to be balanced with departmental flexibility to plan long-term and commit funding to a reasonable level outside Spending Review periods.

FCDO and HMT should consider how to improve the transparency of ODA spending decisions. This includes publishing details of significant changes to
ODA spending in a way which allows for like-for-like comparisons over time and an assessment of the impact of such changes on outcomes the government is seeking to achieve. They should also consider how much time may be required for meaningful consultation with, for example, delivery partners.

FCDO should set out how it intends to measure progress against the aims and objectives in its new development strategy. This should include the indicators and data it needs to monitor progress. It should also set out its responsibilities and those of HMT and other government departments for oversight, implementation and monitoring of the strategy.