Achieving Value for Money in Global Development: Six Recommendations for the FCDO

This blog was originally submitted to the UK Parliament’s International Development Committee as part of its call for evidence on its inquiry into FCDO’s approach to value for money. You can read the original submission on UK parliament’s website here, published on 28 January, 2025.

As part of a wave of public reviews and consultations, the UK Foreign, Commonwealth and Development Office (FCDO) issued a call for inputs on reforming how it thinks about the value for money (VFM) of its spending. In its earlier incarnation, the Department for International Development (DfID) was considered something of a champion and thought leader of aid effectiveness, in significant part due to the role of VFM considerations in approving new program business cases.

Rightly or wrongly, since the merger with the Foreign Office and the creation of the FCDO, the UK no longer has the same reputation as a VFM champion. Moreover, David Lammy, the UK’s Foreign Secretary has stressed a new approach to development, with the focus on equitable partnerships with low-income countries. This implies a focus on building domestic systems and a long-term vision of development impact. If this is to be successful, it requires a rethinking about how development donors such as the FCDO think about how evidence on VFM can be used to allocate resources. Below are our views on this as we have submitted to the FCDO call.

Maximizing value for money (VFM) in UK aid programs is critical for ensuring impactful and effective global development investments. The UK has a proud history of championing an evidence-led approach to maximising aid effectiveness. This is in part due to the centrality of its VFM framework in developing program business cases, but also its early and heavy investment in key cost-effective interventions such as malaria bed nets as well as its leadership towards creating many of the most cost-effective multilateral initiatives in global development such as Gavi, the Vaccine Alliance.

We have previously commented on how aid organizations can “Get the Best They Can Buy.” But below we outline six updated recommendations for rethinking and stepping up the UK’s approach to maximizing VFM, starting with broad recommendations relating to FCDO’s vision for development, moving to strategic shifts, and ending with specific nuts-and-bolts changes.

By adopting these recommendations, FCDO can better align with recipient country priorities, enhance efficiency, and better position itself as a development leader that integrates a desire for the maximization of near-term gains with a vision for long-term sustainable development.

Recognizing FCDO’s role as a secondary funder

A fundamental difference between resource allocation for development, rather than UK domestic priorities, is that development assistance is typically provided in contexts where the UK government is not the primary funder or provider of services. As such, evidence-informed prioritization for development policy, including VFM considerations, must be interpreted alongside the priorities of governments in recipient countries, as well as the priorities determined by a complex array of other development funders.  

To achieve long-term VFM for the aid budget, the FCDO can more explicitly recognize its position as a secondary actor in recipient countries. This means adopting an approach that prioritizes alignment with domestic priorities, working collaboratively to complement and enhance the efforts of local governments. Rather than imposing external agendas, FCDO should focus on supporting recipient countries' strategies, ensuring that programs are contextually relevant and locally owned. The implication is that the UK must use aid programmes to improve the combined value for money of donor and country financing, and not just focus on the short-term, narrow value for money of specific projects and their outputs. This approach is not only respectful of sovereignty but can also ensure that both domestic and external financing addresses the most pressing needs identified through evidence-informed processes.

It is, of course, possible that domestic priorities may not always align with donor priorities. For example, it's not uncommon for highly-resource constrained countries to allocate relatively cost-ineffective options such as expensive cancer medicines. Similarly, donors sometimes have a strong interest in relatively inefficient programs to support specific populations they may view as neglected by local systems. Moreover, in some cases, donors will want to invest in country health system functions not only for the benefit of local populations but also for global health security; for example, investments in laboratory capacity and disease surveillance. While more should be done to move towards a country-led prioritization of health financing, in some cases donors may indeed still choose to earmark funding for their priorities. Even so, this should clearly be done as a secondary funder, supplementing and not replacing domestic financing where possible. We have recently proposed a New Compact approach to how this could be done in healthcare funding.

High value for money through enhanced domestic efficiency

Building on the above recognition of the importance and primacy of local institutions and systems, there is a key opportunity to work with recipient countries to strengthen local evidence-to-policy functions. Value for money in aid should not solely be measured by the immediate outputs of UK-funded programs but also by their broader impact on the efficiency and effectiveness of recipient countries' own systems. There is now over a decade of evidence that strengthening priority-setting institutions can enable countries to achieve better health outcomes at a lower cost, making every pound of UK aid more impactful by amplifying the efficiency of domestic spending. For example, CGD supported India to improve its priority setting systems and achieved a return on the investment of 9:1 in terms of health system performance.

By prioritizing initiatives that help countries use their own resources more effectively, FCDO can contribute to sustainable development that outlives direct UK involvement. This approach acknowledges that true VFM extends beyond short-term project successes to include long-term systemic improvements.

Leveraging a joined-up approach to foreign and development policy

The merger of DFID and the FCO into the FCDO raised concerns that development policy and funding might be subjugated to UK foreign policy interests. While this risk persists, the integration of diplomacy and development policy also offers significant opportunities to deliver high-value outcomes for global public goods and development objectives.

Effective diplomacy can amplify the impact of UK aid by fostering international collaboration, securing commitments to global initiatives, and influencing policies that benefit developing countries. For instance, advancing climate action, strengthening global health systems, or negotiating equitable trade policies are areas where diplomatic engagement can complement development funding to achieve transformative results.

The FCDO’s ability to leverage its dual mandate enables it to operate strategically, using its diplomatic reach to champion development priorities on the global stage. This joined-up approach should be implemented with care, ensuring that development objectives remain central and that the UK’s contributions are aligned with the needs and priorities of recipient countries.

Beyond FCDO, the UK should seek to have a common governance structure and value for money framework of all ODA projects, regardless of department. Currently a large portion of the ODA budget is spent in other departments which . This would promote the performance of all projects, regardless of department, and may usefully challenge the current situation where £4.3 billion was spent supporting refugees within the UK in 2023. 

Focus on fewer, poorer, countries and fewer initiatives

The UK has a tendency to try to do it all, working in a large range of countries and supporting all multilateral initiatives. But it no longer has the aid budget to deliver effectively on such a wide development mandate, instead it must prioritize to achieve value for money. Indeed, most bilateral aid programs worldwide are less than $1 million, which is too small to have substantial impact. The UK needs to avoid exacerbating this problem by focusing its bilateral spend on larger programs in fewer countries. With 62 percent of extreme poverty now in sub-Saharan Africa, this prioritization is likely to be the highest value for money if it focuses on fewer, poorer, countries, and mostly in Africa.

For a broader reach, working through multilateral initiatives can be effective, with value for money as one goal alongside others such as empowering country governments. In 2025 the UK is facing a replenishment traffic jam, with calls on it to provide funding to a range of initiatives including large requests from Gavi and Global Fund, but the UK lacks a clear approach to choosing between them, or understanding the trade-offs. Indeed, CGD colleagues’ work has shown prior multilateral aid reviews have not obviously affected the UK’s allocations. It needs to establish a clear criterion for what it wants multilateral agencies to achieve, assess them, and provide resources accordingly. Providing no resources to some agencies should not be considered a failure, but a success of prioritization.

Strengthening evidence use in strategic planning

The current focus on embedding evidence within business cases, while important, is too narrow. At the point of drafting a business case, the team has typically already decided on the program they want to create and the value for money “assessment” which forms part of the business case is too often an exercise in policy-based-evidence, rather than evidence-based-policy.

Instead, FCDO should prioritize integrating evidence into the development of departmental and team strategic plans. This means formalizing ad hoc initiatives for strategic evidence use like the “Best Buys” papers (a set of mostly internal papers developed to summarize cost-effectiveness evidence by sector). These and other strategic evidence products should ideally be led by independent expert groups, subject to extensive review, be published open access and inform evaluations by the Independent Commission for Aid Impact (ICAI).

This broader use of evidence would help ensure that programs are guided by robust data from their inception and throughout their lifecycle. By embedding evidence in strategic planning, FCDO can foster a culture of continuous testing, learning and adaptability.

Routine collection and publication of unit cost data

A cornerstone of evidence-based decision-making is the availability of reliable and comparable cost data. FCDO should establish routine practices for collecting and publishing unit cost data across its programs. This transparency would not only improve accountability to UK taxpayers but also enable better benchmarking of program performance and the identification of cost-effective interventions.

For example, understanding the cost per unit of delivering key services—such as vaccinations, education, or infrastructure—provides valuable insights for improving efficiency. Moreover, publishing this data can facilitate cross-program learning, ensuring that successful strategies are scaled and less effective ones are rethought.

FCDO already routinely publishes information on key performance indicators in recognition that transparency in the effectiveness of programs is worthwhile. A step forward would be to take VFM seriously not only as an ex ante judgement but also an ex post assessment.

In implementing these changes, FCDO could work closely with the USAID Office for Chief Economist, which is increasingly encouraging and supporting greater collection of cost data by its delivery partners.

Conclusion

As global development faces growing challenges, and aid budgets are stagnant or falling, improving the effectiveness of existing expenditure is more important than ever. By recognizing its role as a secondary funder, supporting recipient countries’ efficiency, leveraging its integrated foreign and development policy, prioritizing fewer countries and initiatives, embedding evidence into strategic planning and publishing unit cost data, FCDO can deliver greater impact.

These six recommendations offer a pathway for FCDO to strengthen its leadership in global development while ensuring that every pound delivers sustainable, high-value outcomes.

With thanks to Javier Guzman and Ian Mitchell for comments on a draft.