Analysis of the FCDO’s approach to value for money in Official Development Assistance.
Cuts to the UK’s aid budget and an unclear definition of value for money risk worse outcomes for the world’s most vulnerable people, MPs conclude in a report.
The cross-party International Development Committee has been assessing the Value for Money (VfM) of the UK’s aid budget or Official Development Assistance (ODA).
The Committee finds that the former Department for International Development was a “global leader” in its approach to VfM, and that the core of this approach has transferred to the Foreign, Commonwealth & Development Office (FCDO).
However, it says it is concerning that there is very little publicly available information on the FCDO’s understanding of VfM or guidance for FCDO staff and partners. The FCDO should follow DFID’s lead in publishing a clear strategy and framework regarding its approach to VfM.
The Committee says it is “disappointed” that the Foreign, Commonwealth and Development Office currently defines ‘Value for Money’ in terms of value to the taxpayer, not improving the lives of those in poverty.
While accountability to the taxpayer should be key to any Government department’s efforts to achieve VfM, the Committee argues that reducing poverty globally must be central to ODA spending. The FCDO should make clear that improving the lives of those in poverty is the core principle of its approach.
The Committee also raises issues with the VfM of aid provided to multilateral organisations such as the World Bank or vaccine access organisation Gavi, which can allow the UK less direct influence over spending than bilateral aid. The Committee finds that while multilateral organisations can offer good VfM, it is concerned that the FCDO has not reviewed this area of spending since 2016, despite it representing nearly £3 billion of core aid funding in 2024.
On the FCDO’s use of private contractors to deliver aid spending, the Committee finds that this does not offer inherently poor VfM, but that incomplete and obscure data does expose aid spent to a higher risk of under-delivering impact. Additionally, engaging with private contractors for many years could see the FCDO lose in-house expertise.
MPs recommend that the FCDO ensure all implementers of UK aid are held to the same standard by requiring all of its private contractors to adhere to the International Aid Transparency Initiative. They also recommend that the FCDO audit all individual private contractor engagement longer than 12 months or approaching renewal, assessing these align with performance outcomes and original mandates.
The report comes amid a “reshaping” of international development and an unprecedented funding squeeze for low- and middle-income countries. The Committee concludes that the UK Government’s cuts to the development aid budget will undermine not only the UK’s soft power but also its national security. Cutting the aid budget twice in the last five years has damaged both the UK’s international standing and those most in need of assistance, it says.
The Committee recommends the Government make every effort to return to spending a minimum of 0.5% of GNI as soon as possible, and provide a clear schedule for rebuilding aid upwards from 0.3% with defined milestones in each Spending Review.
Sarah Champion MP, chair of the International Development Committee, said: “Ensuring aid delivers genuine value for money has never been more important. As major donors tighten their belts, we have to ensure that every penny we spend goes to the people most in need.
“The former Department for International Development was rightly seen as a world leader in Value for Money; the FCDO is broadly hanging on to that reputation. But it must make some urgent improvements.
“Reducing poverty must be the central aim of the development budget. While accountability to the taxpayer is an important consideration, the FCDO’s current definition of VfM risks diverting focus away from improving the lives of the most vulnerable – the very reason the aid budget exists at all.
“The savage aid cuts announced this year are already proving to be a tragic error that will cost lives and livelihoods, undermine our international standing and ultimately threaten our national security. They must be reversed.
“Value for Money is critical to making the most of a shrinking aid budget. While this report finds some positives, the Government must take urgent action to wipe out waste and ensure the money we are still spending makes a genuine difference.”
