By Nick Mann | 11 February 2013
The UK Department for International Development should use its ability to withdraw funding from organisations to ensure it gets value for money from aid spent through multilateral bodies, MPs said today.
In a report published today, the House of Commons Public Accounts Committee noted that in 2011/12, the department spent £3.6bn, 47% of its total aid budget, via 43 multilateral organisations. This was an increase from 41% of the total aid spent the year before.
Multilateral bodies can play a ‘hugely valuable’ role in meeting the department’s objectives, committee chair Margaret Hodge said. ‘But the department must rigorously assess the effectiveness of these organisations, particularly as the aid budget continues to rise significantly,’ she added.
The committee’s report focuses on the DFID’s first Multilateral aid review, which was published in March 2011. This was a ‘significant step’ forward for the department’s assessment of how multilateral organisations were performing, it said.
But it was limited by organisations not making available the ‘good quality’ data needed to ‘assess and demonstrate’ whether the UK was getting value for money from its aid.
MPs also noted that, despite nine organisations being rated as ‘poor’ in the review, just £8m in funding had been withdrawn to date from four multilateral bodies.
‘Linking funding levels to performance provides a strong incentive for organisations to improve but so far changes to funding patterns have been limited,’ the report said.
‘The department should use its information on performance to determine future levels of funding and where it provides a significant proportion of total funding, use this leverage to drive improved performance.’
Concerns were also raised over whether a lack of competition was preventing the DFID from getting value for money from its contracts with bilateral bodies responsible for delivering aid.
‘Some organisations working for the department have reported substantial financial returns,’ Hodge noted. ‘This can undermine public confidence that aid is being put to the best use possible. The department must develop a better procurement strategy to help it understand the provider market and increase competition between suppliers.’
The DFID should also do more to demonstrate the effectiveness of its policies and processes for detecting fraud in the use of both multilateral and bilateral aid, the report said. ‘We urge the department to regularly provide the committee with figures on detected fraud on a country-by-country basis,’ Hodge added.
A spokeswoman for the DFID said: ‘We welcome the PAC’s recognition that the Multilateral aid review, introduced by this government, provides a rigorous assessment of value for money of multilateral agencies. For the first time, funding has been stopped to four poor performers with four others put into special measures, and it is a model that has been adopted internationally.
‘But we are determined to get even better value for money and more effective aid from multilateral agencies. We want to see clear evidence of reform in this year’s updated Multilateral aid review before committing any new funds. If it is not good enough we are prepared to stop funding,’ she added.
