NAO recommends increased levels of accountability and coherence of aid spend across government departments

18 July 2017

The National Audit Office (NAO) has published its progress report on managing the Official Development Assistance (ODA) target. In 2015, ODA was spent by 14 different Government departments or cross-government funds, with 80.5% being spent through DFID.

This proportion is predicted to drop to 70% by 2020, meaning effective government management of the budget across departments and particularly its preparedness for managing increased levels of ODA expenditure through Other Government Departments (OGDs), will be more important than ever.

The report says that the emphasis given to ODA expenditure from OGDs has led to gaps in accountability and responsibility, and recommends that DFID focus on developing ways to capture the overall effectiveness of the budget and assess its coherence across government.

Government’s management and oversight of 0.7% spend of GNI on ODA

The first part of the report identifies several issues that limit the ability to assess progress and coherence of ODA expenditure. 

Despite the 2015 UK Aid Strategy setting the aim for all departments spending ODA to be ranked as “Good” or “Very Good” on the International Aid Transparency Index within 5 years, DFID was the only department to receive such a rating (“Very Good”) in 2016. In previous years, the Foreign and Commonwealth Office and the Ministry of Defence have been rated either as “Poor” or “Very Poor”. 

The report highlights weaknesses in central government accountability for the budget. DFID holds ultimate accountability for meeting the total ODA target, despite having control of a decreasing proportion of it. No single part of government is responsible for monitoring the overall effectiveness and coherence of ODA expenditure.

Other government departments’ ODA spend

The second part of the report looks at the progress that has been made by individual government departments in managing their expenditure of ODA. DFID has improved by having a smoother spending flow throughout the calendar year, however of 11 OGDs or funds examined, 5 spent half or more of their calendar year expenditure in the last quarter. 

The report also voices concern at the increase in value of uncashed promissory notes to multilateral organisations. Promissory notes are ODA contributions made in theory by DFID towards projects which meet the department’s mission "to promote sustainable development and eliminate world poverty". The investment is not completed until projects have delivered against agreed targets and objectives and ensures that whilst the ODA target is met, the promissory note can be spent within a flexible timeframe. The report raises concerns that the continued growth in the balance of outstanding promissory notes could undermine the credibility of the ODA target.

The difficulty OGDs face in overseeing ODA expenditure is reflected by departments, such as the Department of Health that has set up oversight boards despite ODA only making up a small proportion of their overall spend. HM Treasury has categorised ODA expenditure as “novel and contentious” for many government departments. However, most OGDs have attended training sessions on ODA management run by DFID, which allows them to draw on the department’s expertise.