Expenditure Review (Hansard, 13 February 1996)

§ Mr. Hanley

The fundamental expenditure review of the ODA was thorough and wide ranging. It involved 521W consultation with many of our principal partners. We deposited the report in the Libraries of the House in December and it is available also from the ODA.

The FER's conclusions were recommendations only. Many built on work already in progress. The Government have taken into account Members' views expressed in the debates on development on 30 January and 7 February. The Government's response to the key recommendations is as follows.

First and foremost, the FER confirmed the continuing need for the UK to provide substantial flows of concessional aid; and recommended that the ODA should retain responsibility for bilateral and multilateral aid. The Government strongly endorse both recommendations, which underpin our commitment to remain a major donor.

The review recommends clarification of the purpose of the aid programme by a better definition of its basic purpose and aims. The Government have agreed a revised mission statement which defines the ODA's overriding purpose, as well as the aims to be pursued.

The new mission statement is as follows: ODA's purpose is to improve the quality of life of people in poorer countries by contributing to sustainable development and reducing poverty and suffering. To this end ODA will aim:

to encourage sound development policies, efficient markets and good government;
to help people achieve better education and health and to widen opportunities—particularly for women;
to enhance productive capacity and to conserve the environment; and
to promote international policies for sustainable development and enhance the effectiveness of multilateral development institutions.

The FER recommended that ODA's country programme resources should be more concentrated in order to enhance impact. The Government agree with this principle. A larger proportion of our bilateral resources will be allocated to those countries which need it most, can use it effectively and where it will have a real impact. Account will also be taken of Britain's wider national interests. There will be no sudden change. Already the 20 largest recipients accounted for some 69 per cent. of planned country programme expenditure in the last financial year, and on current plans we expect this proportion to increase to some 73 per cent. by 1998–99. There is no specific target percentage nor will the list of the largest recipients necessarily be exactly the same from year to year—though concentration on the poorer countries in Africa and Asia will continue.

The Government will continue to assist a wide variety of other countries through bilateral country aid programmes. At the same time we will increase the number of countries where a direct aid relationship is sustained through heads of mission schemes rather than a traditional bilateral country aid programme. In addition, we shall maintain worthwhile aid relationship through multilateral channels and through other non-country bilateral programmes, including research, scholarships, volunteers and our financial support for British non-governmental organisations.

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At the same time, the ODA will sharpen its focus even further on activities which contribute directly to its aims. The FER made a number of sensible recommendations to enhance the strategic planning process within the ODA. Better corporate and business planning has begun, strengthening the important links in all cases between the objectives and the resources of all kinds used to achieve them.

The United Kingdom makes an increasing contribution through multilateral aid. The FER recommended strengthening our role in multilateral organisations; improving linkages to our bilateral aid; and securing better value. The Government accept these recommendations. The ODA will continue to have lead policy and financial responsibility for those multilateral programmes which are a charge to the aid budget. We will reinforce our efforts to improve the quality and focus of programmes managed by multilateral organisations. This will include reform in the UN agencies as well as continuing work in Brussels. The ODA will play a still greater role in promoting international policies for sustainable development and enhancing the effectiveness of multilateral development institutions.

The FER made a number of recommendations concerned essentially with internal management processes. All have a common purpose: to improve further the effectiveness of the ODA, to increase impact, and to obtain better value for money. The majority have been accepted and are now being implemented.

Very few recommendations were not accepted. Notwithstanding the recommendations in the FER, the geographical Minister of State in the Foreign Office will continue to have formal responsibility for the joint assistance units managing programmes in the former Soviet Union and east and central Europe; and the ODA will continue to make a grant in aid to the British Council.

The FER was followed and complemented by a senior management review. Changes recommended include a restructuring of responsibility at senior management level and the designation of a senior manager to promote each of the four aims.