The Newton Fund

A £735 million aid fund is poorly designed to deliver its primary purpose of addressing development challenges and advancing development for the poorest people and countries through research and innovation, and does not ensure its spending is a good use of UK aid. 

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Published
7 Jun 2019
Assessment
Amber - Red
Lead commissioner
Tina Fahm
Subjects
Research and innovation, UK ODA fund

The Newton Fund is a research and innovation partnership fund managed by the Department for Business, Energy and Industrial Strategy (BEIS), which was established to develop science and innovation partnerships to reduce poverty by generating and putting into use knowledge and technology, with a secondary purpose to strengthen the UK’s wider prosperity and global influence by building ties with partner countries, promoting the UK as a global leader in development research and unlocking opportunities for collaboration and trade.

However, the fund was poorly designed to pursue the aim of promoting international development, and in reality its secondary objectives – such as building ties with partner countries like China, India, Brazil and South Africa – have often been the main driver of its work. An estimated 90% of UK aid spent through the Newton Fund stays in the UK with UK institutions, which is contrary, at least in spirit, to the UK government’s commitment to untying all UK aid.

BEIS has provided little effective oversight or management of the Newton Fund, resulting in weaknesses such as a lack of transparency and accountability, weak coordination within and across country partnerships, and a lack of a coherent approach across the fund to securing value for money and maximising development impact.

Although improvements have been made to the Fund’s working processes in recent years, the government needs to speed up its work to strengthen the Fund.

Findings

  • The Fund was not originally designed as an ODA fund, and its original focus was on promoting the benefits to the UK from collaborating on research and innovation with middle-income countries, as emerging research nations, economic powers and trading partners of the future.
  • This repurposing was not accompanied by any significant change to the Fund’s design to reflect its new primary purpose of promoting international development.
  • The Fund was poorly designed to deliver development goals; secondary objectives have often been the main driver of its choice of partnerships and approach.
  • The first round of Newton Fund allocations was determined more by the absorptive capacity of UK delivery partners, than the needs of partner countries.
  • The matched funding requirement may disadvantage poorer countries, who tend to be less well resourced.
  • Our survey suggests that almost 90% of UK aid spent through the Newton Fund stays in the UK with UK institutions.
  • BEIS does not provide effective oversight or management, resulting in blurred accountability, a lack of transparency and weak coordination within and across country partnerships.
  • The Newton Fund is promoting some strong research partnerships, but the Fund is not promoting the best use of ODA and some projects appear not to be within the ODA definition.
  • The Newton Fund lacks a convincing approach to capacity building.
  • BEIS has no coherent approach to value for money at the Fund level.
  • The Newton Fund is reported by BEIS as untied aid, but it appears to be tied aid in spirit.
  • The Newton Fund does not have a Fund-level approach to capturing development outcomes and so it is not possible to reach an informed conclusion on the Fund’s development impact over the past five years.

Recommendations

  1. As the Newton Fund is 100% ODA, BEIS should ensure that the Fund increases its focus on achieving its primary purpose, which is to meet the development needs and priorities of its partner countries. It should require improved ODA compliance and assurance processes across delivery partners.
  2. The Newton Fund should ensure that it meaningfully considers options for reducing gender inequality and reports against its progress.
  3. Given that the UK is committed to untying 100% of its aid and reports its aid as fully untied, BEIS should ensure that the funding practices of the Newton Fund comply with both the letter and the spirit of the untying commitment.
  4. BEIS should improve the governance and accountability of the Newton Fund and put in place a strategy setting out how it will maximise development impact as its primary purpose.
  5. BEIS should improve the Newton Fund’s approach to and measurement of value for money.
  6. The Newton Fund should improve its approach to monitoring, evaluation and learning at the Fund level.

Government response

The government publishes a response to all ICAI reviews. The government response to our Newton Fund review will be published in due course.

International Development Committee

There will be an International Development Committee hearing into this review in due course.