Last month the UK development minister discussed in parliament the possibility that she might scrap the “Independent Commission for Aid Impact”.
“This is a prioritisation situation. I have to ask myself whether that is the right use of that money or whether we could get what we need more efficiently.”
While critics have accused her of simply trying to avoid scrutiny, we agree it’s fair to ask the question. So let’s do that.
The Independent Commission for Aid Impact (ICAI) was established in 2011 by the coalition government as part of a broader push for aid transparency and accountability that accompanied the commitment to increasing spending to 0.7 percent of gross national income.
ICAI has a small staff (around 10 people), plus teams of external consultants, and publishes about seven reports per year at a total annual cost of around £4 million. Total annual UK aid, even after the cuts, will be around £9.2 billion. So ICAI’s current budget would be 0.04 percent of the new total aid budget.
So for ICAI to at least add as much value as its costs, it needs to improve the quality of aid spending by at least 0.04 percent. That doesn’t seem that tall of an order. While measuring all the benefits of the commission seems near impossible, it's not hard to imagine a single review producing a benefit of £4 million. Take, for example, the ICAI review of the environment department (Defra)’s £500 million Blue Planet Fund. The review identified “serious weaknesses, duplicated work and delivery gaps, and a lack of poverty focus.” The government accepted all of ICAI’s recommendations. If improvements made to this one fund led to just a 1 percent improvement in performance, that alone would cover ICAI’s annual budget.
As any good evaluation expert would tell you, a good evaluation should start with a theory of change. So, what is ICAI trying to achieve? The minister argues that ICAI hasn’t been successful at persuading the general public about foreign aid. That’s probably true, but that’s not its primary goal. ICAI’s theory of change lists its primary intended impact as “improvements to UK aid spending,” with public assurance that aid is effectively scrutinised listed as an “indirect impact.” That most of ICAI recommendations are accepted by the government is one reasonable indication that it may be achieving its primary objective.
ICAI will also have some impact through deterrence and culture-setting. Civil servants and Ministers know that there is a chance of their project coming in for independent external scrutiny. This incentive effect outweighs the frustrations experienced by some civil servants having to respond to ICAI’s requests and recommendations. ICAI reports to parliament and is typically well covered in the press. Whilst the Foreign, Commonwealth, and Development Office (FCDO) commissions plenty of evaluations itself, there is an inherent conflict of interest for evaluators who rely on repeat business. ICAI explicitly recruits consultants who don’t have any other business with FCDO to avoid this.
The FCDO also doesn’t typically commission evaluations of projects run by other government departments. ICAI, on the other hand, plays an important role scrutinising spend across government. It was the first to provide clear public evidence on the poor performance of programmes run by some other government departments and therefore made a case—particularly with parliament and the public—for much of the aid budget moving back into the FCDO, agreed at the last spending review. FCDO’s share of ODA (excluding refugee spend) will rise from 77 percent in 2020 to around 88 percent in 2028. Several of the programmes that ICAI scored poorly have also been closed—including, for example, the £735 million Newton Fund, and the £1.3 billion Prosperity Fund.
What are the alternatives to ICAI?
The minister suggested that the National Audit Office (NAO) could take over from ICAI. This seems like a weak option to us. The NAO already covers aid spending within its mandate, but doesn’t have the deep experience of working in sometimes very different contexts that ICAI and FCDO do. Furthermore, the NAO reports to parliament rather than to Ministers, so the FCDO couldn’t ask it to do more on aid. ICAI could also be made more effective if it reported to parliament in the same way as the NAO - although this would not necessarily save any money.
The government is undertaking a “full line-by-line review of all public spending, including Arm’s-Length Bodies” but it seems that the cabinet office were persuaded that ICAI serves a distinct and useful role.
The law requires that the Government make arrangements for the independent evaluation of UK aid. It seems difficult to envisage that being fulfilled from within the Department.
What do other countries do?
The short answer: nothing quite like ICAI. Germany has DEval, a well-resourced evaluation institute, but it reports to the development ministry rather than parliament. Sweden's Expert Group for Aid Studies (EBA) commissions research on aid effectiveness, but a Swedish government review found its reports had "not had any direct impact on government policy, nor have they affected the way [the aid agency] works in any decisive way." The Netherlands' IOB has been evaluating aid since 1977 but sits inside the foreign ministry. None of these bodies have ICAI's combination of independence from the executive, direct accountability to parliament, and a public traffic-light scoring system that generates media coverage and political attention. The US model (relying on the Inspector General and Government Accountability Office) has just been eviscerated by the Trump administration's dismantling of USAID oversight. France explicitly set out to copy ICAI’s model, but the initial plan to have it report to the Court of Auditors was watered down, with the recently launched commission sitting inside the Ministry of Foreign Affairs.
Five steps to improve ICAI
Instead of scrapping ICAI, the FCDO should instead reform the way it works to make it more effective at driving up the value and impact of the government’s international role.
We have five suggestions:
- Grant it full independence. ICAI’s chief commissioner should be appointed by the International Development Select Committee, not the development minister. This follows the model of the NAO’s comptroller and auditor general, who is appointed by the Public Accounts Committee. It would fulfill the legal requirement for “independent” evaluation in the 2015 International Development Act, and avoid any narrow political incentives in the appointment by this or a future government.
- Look beyond aid. The government recognises the value of non-aid levers, and ICAI should too. There are a range of government policies beyond aid that impact developing countries (such as the £10 billion clean growth export finance goal and the Developing Countries Trading Scheme). A more effective ICAI would have the mandate to scrutinise the full range of government policies across Whitehall.
- Evaluate evaluations, not projects. FCDO can commission its own project evaluations. An independent commission is uniquely placed to hold FCDO accountable for the quality of its own internal evaluations. ICAI now publishes its own literature reviews and it should be an expert in “what works”.
- Evaluate proposals, not projects. Major projects start with a business case that lays out their expected results. There is huge value to independent scrutiny of whether these claims for expected results are realistic or not. By scrutinising these it would create important incentives for officials to avoid optimism bias and ensure Ministers get good advice on impacts.
- Build internal expertise. Instead of contracting out all of the work to consultants, ICAI should be allowed to spend its budget to recruit and build in-house expertise rather than relying on consultants, to retain institutional knowledge.
The government intends to move from a model of service delivery to system support. ICAI plays an important role in incentivising officials to design projects that have impact—we urge it to strengthen that system rather than remove it.
