National Audit Office report on the effectiveness of government spending on overseas aid

By agency reporter
June 21, 2019

The government needs to do more to demonstrate its £14 billion of spending each year on Official Development Assistance (ODA) is effective across the full range of activities it supports, according to a new report by the National Audit Office. 

Every year since 2013, the UK government has met the target to spend 0.7 per cent of its gross national income on ODA. Since 2015, the government has been legally obliged to meet the target.  

The NAO report found that departments have put in place structures to support target setting and performance assessment. And there is good evidence of individual programmes securing impact.  However, taking ODA expenditure as a whole, government has placed insufficient emphasis on demonstrating its effectiveness and on progress against the UK Aid Strategy. The NAO found that government has only just started to consider the effectiveness of ODA expenditure across departments and what this says about progress in implementing the UK Aid Strategy.  

Responsibilities for considering the effectiveness of ODA expenditure are fragmented across government.For example, HM Treasury considers business cases for ODA expenditure, but does not have a role in considering the impact of actual expenditure. Departments are responsible for securing value for money from all their expenditure, including ODA.  

The 2015 UK Aid Strategy set out that more ODA expenditure would come from sources other than the Department for International Development (DFID). The proportion of total ODA DFID spends has decreased from 89 per cent in 2013 to 81 per cent in 2015 to 72 per cent in 2017. ODA spending by other government departments (such as the Foreign & Commonwealth Office), by cross-government funds (such as the Conflict, Stability and Security Fund), and through other payments and attributions has almost trebled over this period. 

Neither DFID nor HM Treasury has assessed whether allocating the ODA budget to departments other than DFID has had the impact intended. ODA-funded programmes generate additional challenges such as making sure expenditure is eligible to count towards the target and managing programmes in hostile environments.  

Widening ODA expenditure to other departments has increased risks to effectiveness. For departments other than DFID the changed approach to allocating ODA creates an opportunity to access new funds at a time when many feel their core funding is under great pressure. It is also not clear whether the intended benefits, for example, of drawing in wider skills have been realised.  

There has been a lack of progress in improving transparency, a key objective of the aid strategy. DFID publishes good quality information on expenditure, for example, how much is spent, by which department and in which country. But the NAO found that very few departments make public information about their ODA expenditure, such as the amounts for which they are responsible, the programmes this budget funds, or the impacts secured for this spending.  

The NAO recommends that as part of the next Spending Review, HM Treasury should assess departments’ capability and capacity to deliver ODA projects and their plans to evaluate their effectiveness. Government should also strengthen its approach to the governance of ODA so that it is clear where responsibility sits for overall coherence and achieving value for money.  

Gareth Davies, head of the NAO, said: “The ODA spending target has been successfully met for the past five years. It is however unclear whether government is achieving its objectives in the 2015 UK Aid Strategy. “Government does not know whether giving responsibility for spending ODA to a larger number of departments has had the impact it intended.  And its progress in improving the transparency of spending has been slow.  “While there is good evidence that many aid programmes are securing an impact individually, government does not know whether all parts of ODA, taken together, are securing value for money.”

* Read The effectiveness of Official Development Assistance expenditure  here

* National Audit Office https://www.nao.org.uk/

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