Aid, abetted: how UK spending watchdog has improved value in aid budgets

By on 11/07/2019 | Updated on 24/09/2020
You’ve been ICAI’d: unit provides a level of scrutiny many are “not used to”, says Paul Scully MP. Left is Matthew Rycroft (Image courtesy: Candice McKenzie/Institute for Government).

The UK’s foreign aid spending watchdog, the Independent Commission for Aid Impact (ICAI), is “still a well-kept secret,” according to ICAI chief commissioner Dr Tamsyn Barton. But the little-known organisation could hold valuable lessons for UK and international governments on how to get the best value for public money. 

ICAI was established as an autonomous body in 2011, after the Coalition government pledged to begin spending 0.7% of GDP on international development aid – complying with a UN resolution dating back to 1970. As well as ensuring that money was spent effectively as the Department for International Development’s (DfID’s) budget rose, the government was keen to soften criticism from opponents of the target. ICAI’s website says its remit is twofold: “To ensure UK aid is spent effectively for those who need it most, and delivers value for UK taxpayers.”

The UK was meeting its 0.7% goal by 2013, and now spends £14bn (US$17.5bn) annually on overseas aid. And there is much to be learned from the ICAI model about ways to scrutinise and improve value for money in government spending – as the panellists discussed at an event hosted by think tank the Institute for Government earlier this week.

Put on the red light

ICAI produces nine evidence-based reports each year, using a simple traffic lights system of red, amber and green to score projects and setting out recommendations. Reports are scrutinised by the House of Commons International Development Committee or its ICAI Sub-Committee, and the government is expected to report on progress against ICAI recommendations within a year.

These reports create quite a stir, commented Matthew Rycroft, DfID’s permanent secretary. Getting an amber-red “is quite a significant alarm bell,” he said. “You wouldn’t believe the amount of scurrying around that goes on in order to respond to that and really understand what are the ICAI trying to say to us: why are we doing badly on this?”

And it’s not just DfID that undergoes this process. A quarter of the aid budget is now spent by other government departments, which ICAI can also examine. Many departments report “being ICAI’d,” said Paul Scully MP, chair of the ICAI Sub-Committee of the International Development Committee. ‘ICAI’ became a verb, he says, because the unit provides a level of scrutiny many “are just not used to.” 

ICAI remains a “well kept secret”, says chief commissioner Dr Tamsyn Barton. Left is Martin Wheatley (Image courtesy: Candice McKenzie/Institute for Government).

Expert witnesses

ICAI’s in-house specialist expertise is crucial to its effectiveness, said Scully, noting that the deep level of evidence-based research the organisation provides is “incredibly useful” to MPs and government departments. “I always see us as almost the laymen scrutinising, whereas ICAI provides the professional impetus. They are the development economists, they are the academics, they are the auditors that can come in and get down to brass tacks.”

Institute for Government senior fellow Martin Wheatley praised ICAI’s evidence-based approach to calculating the efficacy of public spending, saying that it involved “a focus on the results of spending, not just divvying money out and hoping for the best.”

“Planning in the 2015 spending review was all too often not based on sound assumptions about what value and impact you could get from a given sum of money,” he added. “The result, if we look at prisons, social care and many other areas, is services in crisis and emergency cash injections. Not good for services, not good for the Treasury.”

Bang for your bucks

However, Wheatley noted that in recent years other governments have much improved their ability to track the outcomes of spending – suggesting that ICAI is an example of best practice in an otherwise bleaker national picture. In terms of demonstrating the results of spending, “there’s a risk, I think, of the UK falling seriously behind international practice,” he said. In places such as Canada and the Australian state of New South Wales, he added, “governments are getting better at making sure spending actually achieves something, and demonstrating that.”

About Natalie Leal

Natalie is a freelance journalist whose work has been published by The Sun Online, The Guardian, Novara Media, Positive News, and Welfare Weekly, among others. She also writes reports and case studies on global business trends for behavioural insights agency, Canvas8. Prior to working as a journalist Natalie worked for the public sector in social services for several years. She switched careers in 2013 after winning a fully funded NCTJ in a national writing competition. She holds a Masters degree in social anthropology from Sussex University where she specialised in processes of social change and international conflict and reconciliation processes.

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