20 October 2010

DFID and the Spending Review: The 11 Billion and the other two Billions

So, the comprehensive spending review has spoken. DFID's budget will go up by 35% by 2014-15 to 11.5 billion with all ODA at 12.6 billion thus meeting the 0.7% target of ODA to GNI as promised (although no news about legislation). That's good news.

Other headlines:
  • the increases will be a reverse-L shape, modest increases in the next 2 years (with ODA to GNI fixed at 0.56%) with the big increases to 0.7% in the 2013-2015 period
  • administration costs--real cuts by 33% in line with other departments
  • "an international development programme that contributes to national security goals" with spending to support fragile states and conflict affected states increasing from 22% to 30% of ODA by 2014/15
So, 35% more money, 33% less staff, working in more fragile contexts, with a greater need to demonstrate impact...that sounds tough.

Other quick observations:

  • the percent of ODA controlled by DFID will remain roughly constant
  • the climate settlement is multi-department and will take some time to unpack
  • there is a statement in the DFID settlement that "80% of poverty reduction is accounted for by long term growth in average incomes". I don't recognise this number--interesting to know where it came from and which study it is based on.
  • there's nothing about about empowering women in the DFID settlement
  • BBC's Newsnight TV programme has just finished and did not mention any international development backlash
On the increase of the share of ODA to conflict prevention, the Guardian reports an interesting exchange between Joan Ruddock MP and PM David Cameron. In response to a statement of concern about this increasing share to conflict prevention, the Prime Minister quoted Paul Collier's Bottom Billion as justification for this emphasis. The fact is that DFID still talks about "helping the billion people in the world who live in poverty", not Collier's Bottom Billion. They are not one and the same. In fact my colleague Andy Sumner reckons the Collier Billion represent only 27% of the poverty billion.

Collier's counter argument to Sumner is that (a) his billion are trapped and (b) development cooperation is needed to unlock the traps. The fact is we don't have evidence to show that the poor trapped in the Collier countries are any more trapped than the poor trapped in other countries such as India. We also don't know if development cooperation is any better at springing traps in the former versus the latter countries. More evidence is needed on these questions.


Laurence Chandy said...

Hi Lawrence,

I think I can help you with the 80% figure and its source. I'm fairly sure it's the Dollar and Kraay classic, "Growth is Good for the Poor". It looks at the relationship between economies' average income levels and average incomes among the poorest fifth of the population and finds that "over 80% of the variations in income of the poor is due to variation in overall per capita incomes".

Interesting that you bring up Collier's Bottom Billion here as he writes in his book about the controversy this paper generated when it was first published.

Jiesheng said...

"contributes to national security goals"

Does that mean that they are rewritting the definition of ODA? What percentage of aid from DFID is actually for development?

Clare Gorman, Institute of Development Studie said...

My colleague James Georgalakis and I went to yesterday’s International Development Committee evidence session with Andrew Mitchell on the outcomes of the MDG Summit. Unsurprisingly questions on the spending review and DFID’s new budget were also put to him.

The best bits in our view were:

• The Committee were concerned that moving DFID funding from 0.56 to 0.7 in year three, having cut admin so heavily, might cause problems (i.e. sudden big increasing in funding). Mitchell said he was sure that the dept could absorb this increase without any problem.
• Several questions about 30% target for spending aid in conflict affected states. Mitchell stated categorically that this was not the militarization of aid and that the government was sticking rigidly to the OECD-DAT rules for ODA.
• Expected emphasis from Mitchell on ‘results focused’ approach with independent assessment. ‘So UK taxpayers can see how every £1 is spent’. DFID in the process of working out the key metrics for measuring results will be.
• Lots of concern and questions from committee members on European development fund – they had recently been on a Brussels trip. Questions asked about why 40% of EU funds go to Turkey. Some criticism of ‘non poor’ countries in former soviet region getting aid. Mitchell offered to prepare a note on EU development fund.
• Mitchell set out plan for an MDG annual audit which the government is developing with CDG and ODI.
• Mitchell said everyone should check out the Gates Foundation’s ‘Living Proof’ presentation which he said he had found very inspiring.
• Some discussion on new data from India showing much higher than expected incidence of malaria there.
• Mitchell emphasized nutrition as key area and said that investing in research in this area would be a key part of DFID’s strategy.
• On the issue of government transparency and accountability, he likened the role of civil society to an ‘International Big Society’.
• Question on whether there was a conflict between results based approach and longer term goals prompted Mitchell to talk about importance of longer term academic based study as provided by organizations like – ODI and IDS. Went on to plug Aid Watchdog.
• Malcolm Bruce asked about post 2015 agenda – Mitchell took the same line as before summit, suggesting it was too early to have this discussion.