The future of the EC development budget

Report on management of the European Community's aid programme, and the role of DFID within this.

Executive summary: "This Report includes important new information as to how the European Community directs the greater part of its external action budget away from the poorest people of the world. The external action priorities of Agenda 2000, a document produced by the Commission outlining its proposals for policy priorities over the next seven years, involve an unacceptable neglect of the needs of the poorest countries of the world. We do not consider it acceptable for the Community to decide on the total amount to be spent on 'external action' for the next seven years without any commitment as to how much will go to the poorest. We recommend that the Financial Perspective include for Category 4 (external action) a commitment to a proportion being spent in low income countries. The current average for member state aid, 62 per cent, should be the minimum percentage acceptable. Thirty per cent of the budget of the Department for International Development (DFID) is spent not by the Department itself but by the European Community. In December 1998 the Department for International Development published its Institutional Strategy Paper on the European Community. Many of the criticisms made by DFID, both in its Institutional Strategy Paper and in evidence, are also made by the Committee in this Report. During 1999 the Community will have agreed its Financial Perspective, setting development expenditure for the next seven years, from 2000-2006, as well as a number of multi-annual expenditure envelopes for particular development programmes. Decisions taken in the next few months will determine the character and effectiveness of EC development policy for several years to come. The excessive underspends in so many of the external programmes reveal a Community unable to manage and disburse its resources but unwilling for political reasons to take the necessary budgetary action. In the light of such underspends, we agree with the Government that there should be no increase in Category 4 funds in the new Financial Perspective. The Commission should concentrate on managing its current level of funding and on distributing those funds more generously to the poor. We are concerned that the creation of the new Common Service Directorate (SCR), and the separation of policy and implementation which it involves, may further erode the already fragile link between evaluations and future programme design. Evaluations should not, however, only influence future programmes, but also future budgets. We recommend that all future budgetary proposals for development programmes include an account of past overspends and underspends, and of all relevant evaluation reports with a detailed justification of the funds proposed in the light of this information. The only way to ensure that development priorities receive due attention in future discussions surrounding budgetary allocations is to create a separate Directorate-General for Development, with exclusive responsibility for all official development assistance. This Directorate-General should introduce all those tools of accountability taken for granted in other organisations: a comprehensive and detailed policy statement; an annual report; a transparent budget and a European Commission document equivalent to 'British Aid Statistics'. Recent fraud allegations have undermined the reputation of the EC. Now more than ever, public attention is focussing on how much the EC spends, on what and why. This Report tells the story of an external assistance budget unfocussed, uncoordinated, ineffectively implemented, and, to use the words of the Secretary of State, "skewed quite dreadfully against the poorest." This too is a scandal and it has been accepted for far too long. We have made recommendations in this Report which call for a fundamental reform of the structure of this budget, its management and the policies which underpin it. Political convenience and particular interests can no longer be allowed to bring the EC development budget into disrepute. The changes we propose will not only repair the Community's damaged reputation in development but, more importantly, give help to those who genuinely need it, the poor of the world."[author]