Cracks under surface of the £5bn Labour mission for world’s poor

from The Times Online

his year marks the tenth anniversary of the creation of the Department for International Development, one of Tony Blair’s first and most dramatic moves to shake up Britain’s Government.

To supporters of the overseas aid agency it underpins Britain’s claim to be a leader in helping the world’s poor, unsullied by national or commercial interest.“There is no doubt in my mind that aid works,” Hilary Benn, the Secretary for International Development, told The Times.

“I think if you ask people around the world about [the department], about Britain’s role in development, then people will acknowledge us as one of the leaders.”

But to its critics, it is a sop to idealistic campaigners to whom Labour partly owed its May 1997 election victory, and who it is now nervous of losing through their anger over Iraq. They argue that it spends money without accountability; that it lacks the staff and know-how to spend it well; and that its budget, which Mr Blair and Gordon Brown have promised will rise for six years, comes at the cost of traditional expertise in the Foreign and Commonwealth Office and the Armed Forces.

“It is one of the unexploded land-mines under new Labour,” said one academic expert in development. “The damage done to Britain in reputation and opportunity cost is enormous.”

The 1929 Colonial Development Act recognised Britain’s responsibility to help its colonies. But there was no separate ministry until 1964, when Barbara Castle became the Minister of Overseas Development. In 1970 the department was absorbed into the Foreign Office; in 1974 it bobbed out again; and in 1979 it went back in.

On the face of it, in creating DfID (which its acronym-tolerant staff pronounce “Dih-fid”), Mr Blair simply continued this oscillation. But DfID set itself loftier goals than its forebears.

“This White Paper sets out the Government’s policies to achieve the sustainable development of this planet,” said Clare Short, the first Secretary of State for International Development.

Its first budget of £2.6 billion, twice that of the Foreign Office, gave DfID a heady power. Its current funding of £5.3 billion is now three times that of the Foreign Office, a source of grievance to some in King Charles Street, under pressure to close embassies. Its funds will probably keep rising; Gordon Brown joined Tony Blair at the 2005 Gleneagles G8 summit in committing the UK to the United Nations target of spending 0.7 per cent of national income on aid by 2013 (compared with 0.48 per cent now).

Many in DfID and outside are eloquent about the relish with which Short’s team distanced itself from “what it saw as the snotty Foreign Office types, or the baby-killers in the MoD”, as one observer put it. “For DfID staff it was tremendous fun,” said another. “They could haul the Jolly Roger up the mast and treat colleagues in Whitehall with disdain, with the full backing of the Secretary of State.”

Benn acknowledges that “when DfID was established, there was an inevitable process of wanting to establish its own identity, the child leaving home . . . making our own way in the world. But when I arrived in 2003, I said to the department, ‘Look, we have nothing to fear and everything to gain from working with other departments’.”

Some of the clash was cultural; DfID hired many staff from nongovernmental organisations (NGOs); its recruitment text promises that “DfID isn’t the Civil Service as you might know it”. But it was also fuelled by distrust about national interest, epitomised by the row over aid for the Pergau Dam in Malaysia, when accusations of a link with an arms sale triggered a government inquiry.

Benn argues that DfID’s focus on poverty is both a moral duty and the exercise of self-interest, to fend off future conflicts and climate change. But some worry that Labour’s strategy is itself skewed by its fear of upsetting NGOs. “The whole policy on development has become more politicised as the NGO movement has grown,” said Professor Paul Collier, director of Oxford University’s Centre for the Study of African Economies. Thatcherite connotations of privatisation, and the high-profile Christian Aid campaign over free trade, have “contaminated and constrained what DfID can do”. DfID lists 99 countries to which it gives aid. It gives just over half the money directly to them (either to governments, if it trusts them to spend it well, or into projects it manages); it channels the rest through the World Bank, the IMF, the UN and the European Union.

From the start, DfID was confronted with dilemmas about where to put its money. Half a century of effort from the world’s best economists, and a torrent of cash, have shown how hard it is to help countries, particularly in Africa. Professor William Easterly, of New York University, author of The White Man’s Burden: why the West’s efforts to aid the rest have done so much ill and so little good, has argued that the poor countries that can make the best use of aid don’t need it, as they can attract investment, while the others struggle to use it well.

Yet DfID has chosen the poorest as its target. “Clare took a decision that we would focus 90 per cent of our aid on low-income countries” (less than $875 per head per year), Benn says, and DfID has recently decided to move farther into “fragile countries”.

Professor Collier, author of the forthcoming book The Bottom Billion, supports this choice, arguing that the priority should be the poorest billion people, who are falling rapidly behind the next four billion, the traditional recipients of aid. But these are the hardest countries to help — and in which to show success. DfID calls itself a “top-performing department”, but there are serious problems in assessing its performance.

Some of its goals are so huge as to be meaningless. As well as saying that “our overall aim is to get rid of world poverty”, it wants to scrap the European Union’s Common Agricultural Policy, complete the Doha Round of world trade talks and combat climate change. “Trying to get DfID to deliver on these things is like asking the catering corps to draw up a battle plan,” said Professor Collier.

DfID’s own measure is the eight UN Millennium Goals, which include eradication of extreme poverty and hunger, and universal primary education. If a country moves closer to those standards, then DfID pronounces itself on target. But it offers no direct account of the fate of its own funding — nor is it generally possible to separate the effects from those of other aid, or of the country itself. As Professor Easterly puts it, much development aid “is inherently unaccountable”.

Some of the bitterest arguments over DfID arise over the cases it largely regards as successes. Critics say that Britain was too quick to embrace what it considered a new generation of African leaders: Prime Minister Meles Zenawi in Ethiopia, President Yoweri Museveni in Uganda, and President Paul Kagame in Rwanda. In the past decade DfID has put £342 million into Ethiopia, £606 million into Uganda and £287 million into Rwanda.

Britain’s aid to Rwanda prompted a long row about whether it helped the Government to pay for its invasions of the Democratic Republic of Congo after 1996. Britain has said that there was no evidence that Rwanda was directly funding militia groups within the DRC. The 2005 Ethiopian elections and the 2006 Uganda elections were both marred by intimidation. Benn says: “We had concerns about the level playing field [in Uganda], but those elections were reasonably free and fair.” On Ethiopia, he says that “up to the moment of polling day, these were extraordinary elections”.

In both cases, in response, Britain diverted aid from central to local government. But in November, the Parliamentary Select Committee on International Development was sceptical about the effect of the chastisement. It also pointed out that “Meles’s and Museveni’s democratic credentials have only been established relatively recently”, and that “political and historical analysis could have led to a much sounder appraisal of the likelihood of such crises taking place”.

To many, such criticism reflects DfID’s patchy possession of professional skills. “The FCO is all we have to analyse foreign governments,” says Richard Dowden, director of the Royal Africa Society. “In Africa, the political factor is the biggest, and unless you get that right, there’s nothing you can do with aid.”

The parliamentary committee was sceptical about whether DfID had the right staff to justify its “sudden prioritisation” of work in fragile states, “not an area in which DfID has longstanding experience or expertise”. It criticised DfID for going into Mozambique and the DRC with staff who did not speak Portuguese or French, as Foreign Office staff would do. “That’s a fair point” about the language skills in the DRC, says Benn, “and we’re on the case.” He adds that “one thing we could learn more from the FCO about is . . . the quality of governance [which] has a huge impact on development”. But he says that, otherwise, he does not recognise the charge. He points to the “demonstrable success” of funding elections in the DRC, and argues that DfID recruits many expert local people.

Many fear that the strain will get worse. DfID will have more aid to pay out; it wants to help more turbulent countries, but to meet efficiency targets, it must cut its 1,900 staff by a tenth. “DfID’s costs should be going up not down,” said Professor Collier. “Yes, fragile states need more folk,” said Benn. “But there are a number of good performers where it is possible to reduce the number of people. India’s one, and Tanzania.” It can give more through the World Bank, he adds.

Benn is widely regarded as good for DfID, after the tempest of the Short years and a less emphatic stint by Baroness Amos. He is credited with consolidating its reputation for theory and strategy. His staff say that they will miss him if he is moved on by the next prime minister, perhaps replacing Margaret Beckett as Foreign Secretary. They see him as passionate about development, while unsentimental about its totems, if not beyond genuflection to lobbyists (such as a recent promotion of the Fairtrade label).

But ten years of DfID still leave the Government with a case to answer: that the constituency for spending growing sums on aid is as wide as it claims; that DfID is the right outfit to spend it; and that it is doing it in the best way.