UK merger of aid and diplomacy departments led to smaller plans and staff shortages

National Audit Office report said impact of £24.7m merger was not fully known and benefits were not assessed

Shanty housing in Khayelitsha, near Cape Town, South Africa. Elevating the UK minister for development and Africa to cabinet level was one feature of the departmental merger. AFP

The British government’s merger of its diplomatic and overseas aid departments in 2020 has cost at least £24.7 million in three years, with the new department only getting “back on track” after reducing its ambitions, a new report found.

The UK’s Foreign Commonwealth and Development Office (FCDO) was formed in 2020 during the pandemic by bringing together the government’s only two internationally-focused departments, the Foreign & Commonwealth Office and the Department for International Development (DFID).

The move was intended to increase the UKs impact on the world stage by combining aid and diplomacy efforts, as well as saving money.

Yet a new report by the National Audit Office found a spend of £24.7 million between April 2020 and April 2023 paid for the merger alone. This did not include indirect costs, such as disruption, diverted effort and the impact on staff, which the government had not tracked.

“FCDO does not know the full costs of the merger and has chosen not to systematically track its benefits, including cost savings, organisational improvements and efficiency gains,” the report said.

The value for money of the merger could not be assessed owing to the absence of “clear objectives or mechanisms to fully track costs and identify benefits”.

One of the FCDO’s successes, the report stated, has been scaling back on its initial plans of delivering 12 programmes within two-years, which allowed the merger to be “back on track”.

“FCDO’s initial portfolio to deliver the merger was unrealistic in scope and timing. The new department recognised it needed to revisit its plans and scaled back its ambitions in May 2022, successfully bringing the merger back on track. All programmes in the updated portfolio were subsequently completed by April 2023,” the report said.

The FCDO’s integrated approach had improved the government's abilities to respond to international crisis, such as “joint humanitarian and political” response to the Ebola outbreak in Uganda, and support for delivery of Covid-19 vaccines across the world, the report said.

The creation of three senior development posts, which included promoting the minister for development and Africa to Cabinet level, was also commended in the report.

But this has come at the expense of aid and development programmes which were at the core of the DFID.

The loss of senior development staff and a shortage of overseas programme managers, has reduced the FCDO's capabilities. The department had marked the risk of skills shortage in aid and development as “severe”, the report said.

Issues in IT, human resources and the allowance for staff posted abroad needed to be resolved, the report recommended.

The report comes as British MPs and aid agencies have lamented the cuts to UK overseas funding for aid and development projects, which was reduced to 0.5 per cent in 2020 from the UN-required minimum of 0.7 per cent.

Sarah Champion, chairwoman of the International Development Committee and a Labour MP for Rotherham, said the report reinforces a view that the FCDO merger was a “bad move at a bad time”.

“The merger hasn’t realised efficiency savings or the benefits that were envisioned. You have to question if the merger was anything other than ideology as it can’t be shown to have offered value for taxpayers.

“The NAO can only find ‘success’ against the scaled back version of unrealistic plans. The UK has taken a hit to its international standing and to the impact of our aid spending,” she said in a statement.

She feared the biggest lost was in staffing, with civil servants quitting the service or recording low levels of engagement and productivity as a result of the merger.

She blamed the Home Office for taking a “staggering increasing chunk” of the overseas aid budget to pay for refugees in the UK.

“The government should now urgently take back some control of these impoverished outcomes and claw ODA budget funding back from the Home Office, which has been taking a staggering, increasing chunk away from its rightful purpose – addressing the great humanitarian challenges of our time.”

Earlier in March, Rory Stewart, former head of DFID and who now leads the charity GiveDirectly, said the UK government's reduced spending overseas was being “concealed” from the public.

“The UK is spending much less money than it was. It is a little concealed from the public because of this apparent shift from 0.7 per cent to 0.5 per cent,” he told MPs.

“We are seeing a change in many bilateral programmes in numerous countries in sub-Saharan Africa,” he said.