The Department for International Development’s approach to value for money is helping to make UK aid spending go further, but improvements are still needed.
All UK government departments are required to achieve value for money in their use of public funds. In recent years, DFID has been working to build value for money considerations further into its management processes and its relationships with implementers and multilateral partners, establishing itself as a global champion on value for money.
In this performance review, we explore DFID’s value for money approach, its progress on embedding value for money into its management processes and whether its efforts are in fact helping to improve value for money.
This review found that DFID has strengthened its processes and systems for ensuring it gains maximum value for each pound spent, has taken swift remedial action to tackle under-performing programmes, and has become a strong global champion on value for money. The review also found that DFID has been diligent in its efforts to cut waste, detect fraud, and improve efficiency, and that this work is improving the return on the UK investment in aid.
However, the review found that DFID’s approach was not adequately reporting and capturing results and value for money at the country portfolio level, or how programmes work together to deliver lasting impact, including reducing future dependency on aid.
It also found that weakness in the annual review process could undermine DFID’s approach to value for money. It found that targets were frequently revised, and that there could be pressures for optimistic scoring of programmes.
Based on this review, we made the following five recommendations to help DFID improve its approach to value for money still further:
DFID country offices should articulate cross-cutting value for money objectives at the country portfolio level, and should report periodically on progress at that level.
Drawing on its experience with introducing adaptive programming, DFID should encourage programmes to experiment with different ways of delivering results more cost-effectively, particularly for more complex programming.
DFID should ensure that principl es of development effectiveness – such as ensuring partner country leadership, building national capacity and empowering beneficiaries – are more explicit in its value for money approach. Programmes should reflect these principles in their value for money frameworks, and where appropriate incorporate qualitative indicators of progress at that level.
DFID should be more explicit about the assumptions underlying the economic case in its business cases, and ensure that these are taken into account in programme monitoring. Delivery plans should specify points in the programme cycle when the economic case should be fully reassessed. Senior responsible owners should also determine whether a reassessment is needed following material changes in the programme, results targets or context.
Annual review scores should include an assessment of whether programmes are likely to achieve their intended outcomes in a cost-effective way. DFID should consider introducing further quality assurance into the setting and adjustment of logframe targets.
The government publishes a response to all ICAI reviews. The government’s response will be published in due course.
International Development Committee
There will be an International Development Committee hearing into this review in due course.