Brexit, COVID-19 and budget reductions put extraordinary pressure on UK aid since 2019

13 Sep 2023

• Watchdog’s review of the four years since current Commission was appointed looks at how UK aid has performed in turbulent times.
• The impact of external shocks was compounded by frequent changes of political leadership and government’s own decisions to merge DFID and FCO and reduce the aid target.
• The merger brought much disruption but so far only a few specific gains, while the budget reductions damaged the UK’s reputation.
• However, ICAI’s scrutiny found many aid programmes still making a positive difference around the world.

The COVID-19 pandemic, Taliban takeover of Afghanistan and war in Ukraine brought much turbulence to the aid programme during 2019-2023, a new report by the Independent Commission for Aid Impact (ICAI) finds today (Wednesday 13 September).

But the UK government added to these pressures – first with the redeployment of staff to prepare for Brexit, followed by the merger of DFID and FCO, and thereafter a series of budget reductions which were damaging to the UK’s reputation, according to the aid watchdog.

Looking back at the last four years of scrutiny, ICAI concludes that while there have been many positive examples of aid making a difference around the world, this work has been impaired by a lack of clear long-term strategy, with continual changes of direction driven by short-term financial imperatives amid a volatile political and economic context in the UK as well as a changing global environment.

Despite the challenges, the majority of ICAI reviews have awarded positive scores for the effectiveness of UK aid over the period from around 2015, showing the value that can be delivered in areas such as climate action, children’s education, and pandemic response. However, the report highlights concerns as to whether the conditions are still in place to sustain this quality of programming in the future.

ICAI Chief Commissioner, Dr Tamsyn Barton, said:

“The past four years of this Commission have been a turbulent time for the aid programme, with the disruptive merger of DFID and FCO coming at a time when Whitehall was already under extreme pressure managing the impact of the pandemic and successive sharp reductions to the budget.

“ICAI’s work has shown time and again how UK aid can make a real difference if the approach is right, and as the government moves forward with its new International Development White Paper, it is important to retain a strong focus on ensuring aid is being used effectively and reaching communities that need it most around the world.”

Prior to the pandemic, the report notes that the redeployment of civil servants to Operation Yellowhammer, the government’s contingency planning for a possible no-deal Brexit, led to development work being deprioritised, including the UK’s engagement with United Nations agencies on humanitarian crises.

Then COVID-19 restricted the UK’s ability to deliver aid on the ground, as the government implemented a mandatory withdrawal of UK staff from 36 countries for three to six months.

The merger of the Foreign and Commonwealth Office (FCO) and the Department for International Development (DFID) in September 2020 – when the pandemic was still at its height – was also poorly timed, the report says. At the time, both DFID and FCO were dealing with COVID-19 lockdowns and mobilising the UK’s global response to the crisis.

Ambitions for the merger were high initially, but these were scaled back to a more limited portfolio of activities focused on enabling the new Foreign, Commonwealth and Development Office (FCDO) to operate as a single organisation. ICAI notes that three years on, while progress has been made in some areas, there have been a series of revisions to the original structure raising questions about the initial vision. Some ‘nuts and bolts’ issues, such as those relating to the new joint finance, HR, records and transparency systems, are also still not fully resolved. The practical challenges of the merger left FCDO “inward-focused and distracted”, according to the watchdog.

Loss of development expertise in the new department was a key concern, with several ICAI reviews noting an erosion in technical capacity and institutional memory. Staffing was also impacted by an initial hiring freeze and then barriers to external recruitment. Local staff working overseas (known as “country-based staff”) reported feeling that they were less valued in the merged department.

UK aid also faced a series of budget reductions throughout 2020-2023. As the aid target is a percentage of Gross National Income (GNI), the contraction of the UK economy due to the pandemic first necessitated a cut in spending. The target was then lowered from 0.7% to 0.5% of GNI, intended as a temporary measure to ease ongoing economic pressures. At the same time, aid resources were increasingly diverted from the poorest countries towards meeting the costs of hosting refugees in the UK, culminating in 29% of the budget being used for this in 2022.

These budget reductions have impaired the UK’s ability to respond to global crises and emerging challenges, ICAI finds. UK bilateral humanitarian aid, for example, fell by half between 2020 and 2021.

While the review does not make formal recommendations, ICAI suggests some key measures that could be taken in the coming years to restore the quality and reputation of UK aid, ensuring it is focused where it is most needed:

• Reducing the volatility of the UK aid budget and facilitating a return to multi-annual planning, to restore the UK’s reputation as a reliable development partner.
• Renewing FCDO’s commitment to ending extreme poverty and placing vulnerable people at the heart of its work, in keeping with the SDGs and the principle of ‘leaving no one behind’.
• Restoring transparency and opportunities for internal and external challenge to the management of UK aid.
• Protecting, rebuilding and making effective use of development expertise, including that of country-based staff.
• Restoring the commitment to evidence-based decision-making that focuses on development outcomes.
• Strengthening measures to prevent and tackle fraud and other risks in the delivery of UK aid so that aid reaches those who need it most.
• Restoring the reliability and quality of UK engagement with key multilateral partners.