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The United Kingdom has emerged as a major player in providing development assistance.  It was one of the first countries to completely “untie” aid, meaning that aid is provided without being tied to any policy considerations, and has created a strong government department responsible for administering the UK’s development assistance budget and policy, which, by law, must have the principal purpose of reducing poverty.  The government has taken an evidence-based approach intended to provide relief not just from the effects of poverty but also from its causes.  This has required close interdepartmental relations and a sharing of resources to achieve the best results.  A public information campaign has also highlighted the work of development assistance provided by the UK. 

I.  Introduction

A.  Official Development Assistance Figures

In 2010 the United Kingdom (UK) provided official development assistance (ODA) that amounted to an estimated 0.56% of its gross national income (GNI).  This is the highest amount of ODA to GNI that the UK has provided since the United Nations (UN) set a target rate of its prosperous members providing 0.7% GNI for ODA.[1]  The 2010 UK percentage amounts to an estimated £8.3 billion (approximately US$13 billion), up from £7.2 billion (approximately US$11.5 billion) in 2009.[2]  Of the 2010 amount, £5.3 billion (approximately US$8.5 billion) went to bilateral aid (£5.2 billion, or approximately US$8.3 billion, when excluding debt relief), and £2.9 billion (approximately US$4.6 billion) went to multilateral organizations, which include, inter alia, the UN, the World Bank, and the European Commission.[3]  

The Department for International Development (DFID) has stated that its budget will increase to £7.8 billion (approximately US$12.5 billion) by 2010–11, and by 2013 the UK aims to provide 0.7% of its GNI for development assistance, a dramatic rise from the 0.36% that was provided for in 2007–8.[4]  In 2009, a private member’s bill was introduced to galvanize this commitment due to concern that the “target is otherwise vulnerable.”[5]  As with the majority of private members’ bills, it was never enacted.[6]  The full coalition government has maintained the position that the 0.7% target will be met by 2013 and stated that it will “enshrine this commitment in law”;[7] however, no legislation has since been put forward. 

The increase in funding toward the ODA/GNI target has been criticized by some Members of Parliament and the public because the steep increase occurred while budgets were being drastically cut for other departments within the UK.[8]  However, despite this criticism, the government remains committed to meeting its targets and maintains that it has both a moral imperative and a national interest at stake to help lift developing countries out of poverty,[9] specifically stating as follows:

On aid spending our commitment is clear – we won’t balance the budget on the back of the world’s poorest people. Confirming our commitment on aid is both morally right and in our national interest.[10] 

B.  Private Contribution Figures

In 2011, a nonprofit organization reported on the figures of private donations in the UK.  It found that during 2009–2010, donations from private individuals amounted to an estimated £10.6 billion (approximately US$17 billion) across the entire UK.[11]  In this period, 24% of these donations went to overseas causes, totaling around £2.2 billion (approximately US$3.5 billion).[12]  This increase from the average of 15% of donations that typically go to overseas causes was attributed to the earthquake disaster in Haiti and the successful appeal for funds in its aftermath.[13] 

C.  Snapshot of Foreign Aid Activity

The UK is providing foreign aid to over one hundred counties.  The DFID’s overall aim is to reduce poverty in poorer countries and to meet eight criteria, known as the Millennium Development Goals (MDGs) and set by the UN (these goals are listed in section II(A), below, under the heading “Regulation of ODA’s”).[14] 

Foreign aid used toward achieving these goals has included funding for activities such as providing clean water and sanitation, giving developmental food aid and food security assistance; forgiving debt, and providing basic education.  In 2010, key achievements were made in the following areas:

  • Education: Trained over 95,000 teachers and building or reconstructing over 10,000 classrooms
  • Health: Trained over 65,000 health professionals, vaccinated almost five million children against measles, delivered nearly nine million anti-malarial bed nets, administered anti-retroviral drugs to 150,000 people with HIV, and distributed nearly 500 million condoms
  • Infrastructure: Provided 1.5 million people with clean water and 800,000 people with better sanitation, built or upgraded 1,500 kilometers of roads and maintained 3,000 kilometers
  • Food and Social Assistance: Provided food to 1.5 million people and provided social assistance to 3.5 million[15]

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II.  Legal Framework

The DFID operates under the legal framework provided for by the International Development Act 2002.[16]  This Act was necessary because the DFID operates using public money, which cannot be spent without parliamentary authorization regarding the manner and purposes of its use.[17]  The Act allows the Secretary of State for International Development to provide development assistance to countries or territories outside the UK if it is likely to contribute to a reduction in poverty or improve the welfare of the population.[18]  Reducing poverty is the “core power” of the Act and, by law, must be the overall purpose for which any development assistance is provided.[19]  The aim of this purpose is, in part, to “protect aid resources from pressures within government to spend money on aims other than poverty reduction.”[20]  This, combined with the strong political figure of a cabinet minister as the head of the organization, has helped to move development assistance higher on the national agenda.[21]

There are certain exceptions to the requirement that the core aim of poverty reduction must be met for assistance to be provided.  These exceptions include assistance provided for humanitarian relief,[22] to the overseas territories[23] of the UK, and to multilateral development banks.[24]  The UK’s overseas territories were excepted “in recognition of the continuing special relationship between the UK and Overseas Territories.”[25] 

The term “development assistance” is defined in the Act as “furthering sustainable development [which is not just limited to environmental or economic aims][26] . . . or improving the welfare of the population.”[27]  The Act does not further define the terms “poverty,” “sustainable development,”[28] or “welfare,” because

to do so might reduce the United Kingdom’s ability to offer assistance . . . .  Poverty is a complex phenomenon and the actions required to reduce it will necessarily be varied.  The power in section 1 is designed to ensure that the Secretary of State will be able to support a wide range of activities and organisations.[29]

Despite there being no specific statutory definition, there has been much discussion on what the term “poverty” includes.  The UK does not interpret it as encompassing the condition of poverty alone, but also as including the underlying causes of poverty, such as conflict, economic difficulties, and corruption.[30]  Thus, under the Act, the Secretary of State may provide assistance that is “preparatory to, or will facilitate the provision of, assistance” permitted under the Act, such as commissioning research intended to provide insight into ways to reduce poverty.[31] 

As noted above, the 2002 Act is necessarily broad to allow assistance to be provided in many ways.  The most common form of assistance, financial assistance, is specifically defined in the 2002 Act.[32]  This definition allows the Secretary of State to provide financial assistance not only through the traditional means of grants and loans, but also through guarantees and the purchase of equities or other company securities, or any combination of the above methods.[33]

A.  Regulation of ODAs

1.  Overview

A 1997 government paper marked a shift in policy and a move away from providing purely economic assistance to developing countries.  Instead, the reduction of poverty was made the overarching aim of the UK’s provision of development assistance.[34]  To achieve this aim, the DFID is working to reach the MDGs, which aim to halve world poverty by 2015.  These goals offer a “quantifiable and measurable”[35] way in which this can be achieved[36] and are to

  • Eradicate extreme poverty and hunger
  • Achieve universal primary education
  • Promote gender equality and empower women
  • Reduce child mortality
  • Improve maternal health
  • Combat HIV/AIDs, malaria, and other diseases
  • Ensure environmental sustainability
  • Develop a global partnership for development[37] 

The DFID has set out its priorities for 2011–2015 in meeting these goals, which include honoring its international commitments; increasing transparency in aid provided; boosting wealth creation; strengthening governance and security in unstable areas; improving the lives of girls and women; and combating climate change.[38]

As noted above, the work of the DFID in meeting these objectives must be within the legal framework of the 2002 Act.  Specifically, two conditions must be met before development assistance will be given. The assistance must: (1) further sustainable development or improve the welfare of the population; and (2) be likely to contribute to a reduction in poverty.[39]

2.  Implementing Agencies

The body responsible for administering the UK’s development assistance budget is the DFID.  This body replaced the Overseas Development Administration (ODA), which formed part of the Foreign and Commonwealth Office.[40]  The DFID was established in 1997 as a government department headed by a minister, with the overarching aim of reducing poverty.[41]  To achieve this, financially the UK is striving to provide 0.7% of its GNI as ODA and it is working toward meeting the MDGs set by the UN.  The DFID has two headquarters in the UK: one in London, England, and one in East Kilbride, Scotland, in addition to offices in over 40 developing countries worldwide.[42] 

The DFID also bears responsibility for the UK’s policies relating to development assistance, which includes aspects of environmental policy, trade, conflict prevention, political relationships, international economy, and migration.  The reason for including these within the remit of the DFID was “recognition that there were important limits on what aid alone could achieve.  A great many other policies pursued by rich nations have as much, or more, impact on the reduction of poverty.”[43]  By creating a governmental department whose sole responsibility was the reduction of poverty, the government hoped to give greater weight to this long-term interest of the UK, which had frequently been sidelined by short-term political and commercial concerns.  A report on the work of DFID noted that  

[a]n important motivation for the establishment of a separate department was to increase the attention paid within Government to the UK’s long-term strategic interests, so that these might be properly balanced against short-term pressures.  For example, it was recognized that it was in the UK’s long-term commercial interests that Africa should emerge as an economically strong trading partner; and in the UK’s security interests that there should be reductions in poverty and inequality and improvements in governance in developing countries.  But these long-term interests had not always been given weight alongside short-term commercial and strategic concerns.  By creating a department with a long-term agenda for global poverty reduction, the intention was to create institutional pressures within government to ensure that the UK’s long-term interests were taken into account alongside short-term pressures.[44]

As a governmental department, the DFID has achieved considerable success.[45]  A report by the Canadian government has noted that the DFID is “generally considered to be the best [development agency] in the world.”[46]  It has received praise from The Economist, which describes it as “a model for other rich countries.”[47]  

Coordination with Other Agencies

The 2002 Act provides for other specified bodies[48] to enter into and carry out agreements to further sustainable development; improve the welfare of the population; or alleviate the effects of a disaster or emergency, outside the UK.  These bodies may not provide any financial assistance, and the Secretary of State[49] must consent to any agreements before they are entered into.[50]

As noted above, the UK established the DFID as a government department with its own minister.  As a result of this, development assistance has a higher profile on the political agenda and policy coherence across the entire government is strived for; the aims of DFID are frequently considered in the policy decisions of other government departments.  

The government has specifically noted that the role of DFID in reducing poverty

is not an exclusive role, and DFID works jointly with a number of other UK Government departments, including those with responsibility for:

  • the economy—Her Majesty’s Treasury (HMT);
  • foreign affairs and diplomacy—the Foreign and Commonwealth Office (FCO);
  • defence, conflict prevention and post-conflict reconstruction—the Ministry of Defence (MOD);
  • the promotion of international trade, enterprise and innovation—Department of Trade and Industry (DTI) [now the Department for Business, Innovation and Skills (BIS)];
  • the pursuit of sustainable development—the Department for Environment, Food and Rural Affairs (DEFRA).[51]

The government has actively pursued interdepartmental arrangements to ensure a “joined up” approach to providing development assistance.  While this approach may at first look similar to tied aid, the government has emphasized that “the aim is for policy coherence and joined-up strategies where possible, while preserving the independence, neutrality and impartiality of [development assistance and] humanitarian aid.”[52]

There was initially friction between some government departments and the DFID; however, there was soon a realization of “the need to build support among developing countries and civil society organizations for their own policies with an international dimension,” and the DFID was regarded “as a potentially useful ally in building international support.”[53]  

An example of these kinds of arrangements is the Conflict Pool, which has brought together the resources of the Ministry of Defence, the Foreign and Commonwealth Office, and the DFID, with the aim of providing a “more strategic approach to conflict resolution.”[54]  The government notes that “it is valued as a means of coordinating the discretionary conflict work of the three departments by joining up UK expertise in development, diplomacy and defence.”[55]  The Pool’s budget for 2009–10 was £100 million (approximately US$160 million), and an additional £71 million (approximately US$113 million) was added from the budgets of the three departments that form part of the Pool.[56]  This budget is allocated to each of the agencies once the Pool approves the strategy to be followed.[57] 

Another example is the “joined up” inter-agency approach, enshrined in the recently established £269 million Stabilisation Aid Fund and Stabilisation Unit.  This unit is jointly operated by the DFID, the Foreign and Commonwealth Office, and the Ministry of Defence.[58]  The Stabilisation Unit works with countries that have been affected by conflict and instability to establish peace and security. 

The DFID also works with a number of international bodies, nongovernmental organizations, and charities—most prominently the World Bank, the UN, and the European Union.  It considers that these bodies “have the skills and access to further our aims of poverty reduction and sustainable development.”[59]  Around 40% of the DFID’s budget goes toward working with these multilateral partners,[60] due to the recognition that

Britain could make only a modest difference on its own; but that there was much that the international community could do by working together.  This led to a much more positive view of the need to work closely with other donors.  Together with a raft of policy papers on particular topics, embracing collaboration with others helped DFID to become extremely influential throughout the development community after 1997.[61]

Limits on Recipients

The UK incorporates UN sanctions into its national law through the use of statutory instruments, which are secondary legislation.[62]  These sanctions tend to be focused on trade and on specific individuals, rather than prohibiting humanitarian and/or development assistance to hostile states overall. 

The UK has provided development assistance to people in need in hostile states.  In these cases, the assistance is typically not provided to the government, but to humanitarian organizations and nongovernmental organizations that work in that country.  One reason for this is that a technical analysis issued by the DFID determined “that poverty and fragile states created fertile conditions for conflict and the emergence of new security threats including international crime and terrorism” and “committed itself to pay greater attention to regional conflict and insecurity.”[63]  The DFID recently stated that 30% of its aid will go to war-torn and unstable countries by 2014.[64]  The aim of the government in pushing such a large percentage of aid in this area is to “help address the causes of conflict, strengthen security and justice, lay the foundations for growth and improve access to basic services.”[65] 

An example of providing aid in a hostile state can be found in the immediate period after September 11, 2001, when the UK increased the amount of development assistance to the people of Afghanistan.  It accepted “that a certain amount of assistance might not reach its intended targets” and reasoned that this was “a small price to pay for saving lives.”[66]  To minimize the amount of assistance being taken by the Taliban, the DFID used international humanitarian organizations and nongovernmental organizations that had “experience in the region and a track record of deliver[y].”[67]  In this case, to avoid breaching any UN-imposed sanctions, the government announced that it was working diligently “to secure humanitarian exemptions in line with our ‘smart sanctions’ policy.”[68]   

3.  Restrictions

As noted above, other than for certain exceptions, poverty reduction is the sole purpose for the provision of development assistance.  It should be noted that the government has used the term “poverty reduction,” which is significantly broader, rather than “poverty relief.”  The government commissioned research to better understand the causes of poverty, which led to the expansion of its program and the inclusion of additional areas, including institution building; governance reform; security; and access to justice programs with the aim of reducing poverty.[69]  While issues in these different areas contributes in some way to causing poverty, care has to be exercised that assistance given keeps the purpose of poverty reduction as its main aim.  The government has noted the difficulty posed by the policy overlap in these different areas:

The distinction between humanitarian, development and stabilisation activities is sometimes not clear cut.  Stabilisation can be seen as filling the gap between emergency humanitarian assistance and longer term development assistance, though, as the definition above shows, it is more than that.  The most fundamental distinctions are between the explicitly political aims of stabilisation (aiming to promote peaceful political processes); the strictly neutral role of humanitarian assistance; and the apolitical poverty-focused rationale for development activity.[70]

Tied Aid

The British government expressed its opposition to tying aid in a White Paper published in 2000, stating that it is

totally committed to the multilateral untying of aid.  Tied aid is one of the most damaging carry-overs from the past.  It is damaging for three reasons.  The first is value for money.  It is estimated that tying aid to the purchase of goods and services from the donor country reduces the value of that aid by around 25% . . . it is grossly inefficient.  It leads to developing countries being supplied with incompatible pieces of equipment provided by different development agencies, each with separate requirements . . . [and] it encourages a donor driven approach to development.  It signals that development agencies’ major concern is not development, but their national contracts.[71]

The government announced that it would completely untie all UK development assistance beginning April 1, 2001.[72]  This was enshrined in the 2002 Act,[73] which was drafted to ensure that any assistance provided to promote UK trade, or for commercial or political reasons, is challengeable in the courts.[74]  It noted that untying development assistance served to create a single, clear mission of reducing and eliminating poverty.  This single mission became a “powerful motivating, unifying and guiding force”[75] for staff because they no longer had to consider commercial, political, or strategic objectives as factors when distributing assistance.

In the early days after the prohibition on tied aid was introduced, there were some struggles regarding the use of development assistance to achieve political aims.  For example, in an attempt to reduce the number of asylum seekers, the Home Office proposed that aid in developing countries be conditional upon their acceptance of the return of failed asylum seekers.[76]  The head of the DFID at the time strongly opposed the use of development aid in this manner and successfully argued that it was illegal because it was not for poverty reduction.[77]  Before this policy announcement and subsequent Act, the UK did tie aid, at 8.5% in 1999, down from 28% in 1997.[78] 


While tied aid is prohibited and poverty reduction is the central aim, the UK does require countries that receive its development assistance to adhere to certain conditions, which if not met have a direct effect on the terms under which aid is supplied.  The DFID has specifically stated that it does not use these conditions to “impose specific policy choices on countries.”[79]  Rather,

[t]he UK policy on conditionality is that DFID’s aid is based on three shared commitments with partner governments: poverty reduction and meeting the MDGs; respecting human rights and other international obligations; and strengthening financial management and accountability and reducing the risk of funds being misused thorough weak administration or corruption.  If partner governments move away from these conditions, DFID can suspend, interrupt, delay or change how it delivers its aid.  DFID does not use conditions to impose specific policy choices on countries.[80]

The UK details in its annual report country-by-country instances where its aid has been interrupted as a result of a breach of conditions by the recipient.  An example of this is in Uganda, where a lack of action taken against corruption resulted in £5 million (approximately US$8 million) of development assistance being withheld.[81]

4.  Discretionary Aid

The DFID’s budget includes a contingency reserve of £100m (approximately US$160 million) per year that can be used for emergency crises.  This funding is discretionary as the government does not “pre-allocate resources for specific humanitarian crises.”[82]  This discretionary fund has also been used to accommodate changes in the exchange rate.[83]  

The Conflict Pool, discussed briefly above, also provides discretionary funding for “conflict prevention, stabilisation and peacekeeping activities.”[84]

5.  Oversight

The work of the DFID is subject to many oversight mechanisms, some of which are set out by law.  Specifically, the DFID operates under the Development Act (Reporting and Transparency) 2006 Act (hereinafter the 2006 Act).[85]  This Act requires the Secretary of State to report annually on the total expenditure of international aid, the effectiveness of the aid in achieving the MDGs, and the transparency of the aid.  These reporting requirements are reflective of the government’s intention that the success of development assistance not be measured by spending targets alone (i.e., spending a percentage of the GNI on ODA) but also by how effective it is in reducing poverty.[86] 

In addition to the requirements of the 2006 Act, the government has also attempted to increase oversight of how development assistance is used.  In its 2010–11 Annual Report, the DFID announced that transparency and accountability are “watchwords” and on June 3, 2010, the Secretary of State announced a new Aid Transparency Guarantee.  This guarantee is that aid will be completely transparent not only to UK citizens, but to those in the countries in which aid is provided.  The government considers this guarantee essential for aid to be effective and to give value for money.[87]  The guarantee requires the DFID to publish on its website detailed information about all new projects into which it enters and to publish a summary of information on the projects in both English and the major local language(s) of the country in which the assistance is being provided.[88]  Additionally, as of April 1, 2011, the DFID must publish every financial transaction over the amount of $500 as part of the government’s Transparency Drive.[89] 

To ensure that the internal functions of the DFID are conducted appropriately, the DFID has its own internal audit department, which provides an “independent and objective opinion on the adequacy of systems of risk management, control and governance, by measuring and evaluating their effectiveness in achieving DFID’s objectives.”[90]

Within the internal audit department, there is a specialist Counter Fraud Unit that is split into two sections, the intelligence section and the investigation section.  The intelligence section looks at “the wider aspects of fraud and corruption,”[91] while the investigation section delves into these matters.

Additional oversight is provided by the National Audit Office[92] which observes public spending by Parliament.  This office conducts audits of the DFID’s accounts and reports to Parliament and the Public Accounts Committee, which analyses DFID’s spending with respect to value for money.[93]  Within Parliament, the International Development Committee scrutinizes the DFID’s annual report and has the authority to hold inquiries into particular areas of the DFID’s work.[94] 

Despite the oversight provided by the bodies discussed above, the government considered that the commitment to spend 0.7% of its GNI on ODA by 2013, particularly at a time when funding was being decreased for other government departments, required greater independent scrutiny.[95]  As a result, it established the Independent Commission for Aid Impact on May 12, 2011.[96]  This Commission scrutinizes the use of all UK ODA to “maximise value for money and impact.”[97]  It reports its findings to the Parliamentary International Development Select Committee and publishes its reports on its website.[98]  

The UK is also a party to the Paris Declaration on Aid Effectiveness.  This Declaration outlines five commitments to improve aid and includes quantifiable targets[99] that are monitored biannually by the Organisation for Economic Co-operation and Development (OECD) to assess progress of the signatories toward the commitments, with a target date of 2010.[100]  The last review was in 2008, and a review of whether the targets were met in 2010 is to be completed at the end of 2011.[101] 

6.  Policy Considerations

The DFID is responsible ensuring “a joined-up development policy across the Government as a whole”[102] with regard to the policy and provision of development assistance.  This approach underpins the government’s belief that development assistance should not be provided in a vacuum and that its success depends on the interaction of a number of policies, including trade and foreign relations, as discussed above.[103]  The DFID formulates its policy “on evidence, focusing on outcomes rather than inputs, and increasing the transparency of policy making and use of resources.”[104]

The DFID has elaborated on the provision of development assistance in a number of policy papers (White Papers) and briefing papers.[105]  These papers provide a more detailed look and discuss the UK’s approach in providing assistance in a variety of scenarios.[106] 

The DFID’s current policy is to reduce poverty by following the UN’s MDG goals.  In 2010 the UK undertook an extensive review of both its bilateral and multilateral aid.[107]  The end result of this was controversial because the government sought to increase the value for money by increasing the amount of development assistance to extremely poor countries and removing aid from other countries where the situation was no longer as dire.[108]  The DFID set, in conjunction with the Treasury, a public target to change the proportion of development assistance for bilateral programs and increase it to low-income countries from 78 to 90%, thus shifting resources to focus on the poorest countries.  This later became known as the 90-10 rule, where 90% of aid goes to the poorest countries and the remaining 10% to others.[109] 

Within these countries, the areas upon which the DFID is currently focusing include tackling health needs and disease, malnutrition, and climate change; encouraging wealth creation by emphasizing property rights; encouraging investment and trade in poor countries; and addressing the root causes of conflict in an attempt to provide stability in some countries.[110]

The UK has attempted to move toward working in partnership with developing countries in need of assistance.  Specifically, where developing countries have demonstrated a commitment to the elimination of poverty and cohesive policies in this area, the UK has announced that it will provide a longer term commitment and greater resources, and will allow more flexibility in how the developing country may use the resources provided:[111] 

where we have confidence in the policies and budgetary allocation process and in the capacity for effective implementation in the partner government, we will consider moving away from supporting specific projects to providing resources more strategically in support of sector-wide programmes or the economy as a whole.[112]

As noted above, the DFID has a large number of field offices in developing countries, allowing them to work closely in the provision of development assistance.  This decentralization of management is intended to “promote dialogue with recipient countries.”[113]

B.  Regulation of Private Contributions

No tax relief is provided for individuals who donate to charities in the UK.  Instead, tax relief is provided for charities that are properly registered in the UK.  This tax relief applies to trading profits; income from land and property; and general income.  Charities can also reclaim tax paid by UK residents who donate to them through a scheme known as “gift aid.”  Under this scheme, registered charities can reclaim tax at the basic rate of 22%, provided the donor has filled in the correct information on the Gift Aid Declaration.  Individuals in tax brackets higher than the basic rate of tax that charities can reclaim may claim the difference between the basic rate and the higher rate of tax.  For example, an individual paying a higher rate of income tax of 40 or 50% who makes a donation to charity may reclaim the 18 or 28% difference in tax paid.[114]  For example, a donation of £100 (approximately US$160), is worth £125 (approximately US$200) to the charity, and the higher-rate taxpayer would be able to claim back £25 (approximately US$40) if they are in the 40% tax bracket or £37.50 (approximately US$60) if they are in the 50% tax bracket.[115]

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III.  Foreign Aid Appropriations Process

The UK’s budget is the major financial statement of the government, typically delivered in spring by the Chancellor of the Exchequer.[116]  The budget is then debated by Parliament, which must then approve it.

The DFID is responsible for the vast majority of the UK’s development assistance budget.  It has two separate allocations in the budget controlled through setting Departmental Expenditure Limits (DEL), and a separate budget allocation within the public expenditure controlled as an Annually Managed Public Expenditure.  Within the DEL the two allocations are for current spending (which includes an amount for administration costs) and for net capital expenditure.  The total budget for DEL in 2010–2011 was £7.5 billion (approximately US$12 billion), from which £1.6 billion (approximately US$2.57 billion) went to bilateral aid in Africa; £7.9 million (approximately US$12.64 million) to bilateral aid in South Asia; and £4 million (approximately US$6.4 million) to bilateral aid in countries in other parts of the world.[117]  The Annual Reports and Accounts note that UK payments made to the European Community for development purposes are taken from the consolidated fund.[118] 

The DFID has not been unharmed by the budget cuts across the government, with the coalition promising to halve public sector borrowing over the next four years.[119]  It was not included in the £6.2 billion (approximately US$10 billion) public spending cuts, but was requested to make “efficiency savings of [its] own, but [told] that these would be recycled back within [its] budget” in 2010–11.[120]  As a result of this, the DFID is to deliver an additional £155 million (approximately US$250 million) of new efficiency savings in 2010–11.[121]  

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IV.  Other Types of ‘Aid’

In addition to its ODA commitment, the UK provides aid in a number of other ways.  The following subheading highlights the different ways in which the UK attempts to meet its goal of reducing poverty.

Emergency Aid

The DFID has a contingency reserve that is intended for use in unforeseen emergencies.  At one point the reserve was £100 million (approximately US$160 million).  This amount was cut by 60% to meet the £155 million (approximately US$250 million) in efficiency savings required as a result of budget cuts across the whole government.[122]  

Religious Workers and Scholarships

Individuals may enter the UK to pursue religious work on a visa for up to two years, or enter as a Minister of Religion.[123]  This work includes “preaching, pastoral work and non-pastoral work.”[124]  The UK also has a Commonwealth Scholarship Commission, funded by the DFID, which offers scholarships to students from developing Commonwealth countries.[125]  The criteria for selection for these scholarships include the “likely impact of the work on the development of the candidate’s home country.”[126]

Foreign Remittance

Migrant workers from developing countries who have secured work in developed countries have also played an important role in helping to lift their families in the home country out of poverty by sending them money.  The World Bank previously estimated that foreign remittances were at one point twice the amount of global aid.[127]  The amount of remittance as a percentage of income that workers in the UK send to their families in foreign countries has declined over recent years as a result of the economic crisis, to between 5 and 15%.[128]  Remittance from the UK goes primarily to India, Pakistan, Nigeria, Jamaica, and Ghana.[129]  The UK supports foreign remittances and has regulated them to ensure transparency and ease of use.  For example, these transactions must be executed in a currency agreed upon between the parties and, when a currency conversion service is offered, the exchange rate must be disclosed.[130]

Debt Relief

The UK is committed to reducing developing countries’ debt.  In 2010–11 the UK provided over £124 million (approximately US$200 million) in debt relief, with £111 million (approximately US$178 million) of this given toward the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative.  The UK also has its own Multilateral Debt Relief Initiative, through which it provides over £10 million (approximately US$16 million) in debt relief to eight countries.[131]

‘Vulture Funds’

The end of 2009 saw renewed legislative efforts to tackle poverty in developing countries in the wake of a judgment from the High Court in London that ordered Liberia to repay a US$20 million debt, an amount equal to around 5% of the Liberian government’s annual budget.[132]  This debt dated from 1978, and had been acquired at a fraction of the real price from the secondary market by two private investment funds.[133]  Funds that are acquired in such a way are frequently referred to as “vulture funds” because the investment funds that purchase these debts get them at significantly less than face value and then pursue legal action to obtain the full value from the country, plus accrued interest.  Repayment of this type of debt is damaging to developing countries because it “diverts the resources provided through debt relief, which are intended to support development and poverty reduction in the country.”[134]

To prevent this from happening to the forty countries[135] that qualify for the World Bank and International Monetary Fund’s Highly Indebted Poor Countries Initiative (HIPC), a Member of Parliament introduced the Debt Relief (Developing Countries) Bill 2010 as a private member’s bill.[136]  The bill was pushed through Parliament and enacted.[137]  It aims to stop private investment funds from obtaining the face value of debts purchased from countries subject to the HIPC by legal action in the UK.[138]  Instead, it subjects the investment funds that have purchased these debts to the same reductions of 67–90% of the original value of the debt as apply to public creditors (multilateral institutions and sovereign lenders) if they enforce their claims in the UK.[139]  The Act applies to any public debt that was created before June 8, 2010,[140] and “applies to any current or future court judgments or arbitral awards obtained with respect to the payment of HIPC countries’ debt, if at any point the creditors attempt to enforce such judgments in UK courts.”[141]  To ensure that the Act does not deter commercial creditors from participating in restructuring debt from HIPC countries, it specifically excludes debts that would be eligible if the HIPC country did not “affirmatively offer to repay its commercial creditors under the HIPC formula.”[142]  It also provides that if enforcement action is taken as a result of default on a restructured debt, the “HIPC-formula write-downs will apply to the original amount of the debt, and not to the restructured lower amount.”[143]

This Act was welcomed by the UN’s independent expert on foreign debt and human rights, who stated that it was “the first occasion on which a country has banned profiteering by ‘vulture funds.’ ”[144]

International Finance Facility for Immunization

The UK is providing resources to the International Finance Facility for Immunisation (IFFIm).  This supports immunization through guaranteeing funds that enable the IFFIm to sell “vaccine bonds” on the private market.  The sale of these bonds makes funds immediately available for vaccination programs in developing countries.[145]  The UK has currently pledged £1.38 billion (approximately US$2.2 billion) until 2026, and holds 45.14% of the total amounts pledged as of March 31, 2011.[146]

The Advance Market Commitment

The UK also provides financing to the Advance Market Commitment (AMC), which aims to create a market for vaccines in developing countries by creating incentives for pharmaceutical companies “to invest in research, development and production capacity for new vaccines that serve the poor.”  The UK has currently pledged $485 million (approximately US$776 million) to this Commitment.[147]

Environmental Transformation Fund

As noted above, the UK has included environmental concerns and climate change as part of its strategy to reduce poverty.  The DFID, in conjunction with the Department of Energy and Climate Change (DECC), has established an £800 million (approximately US$1.2 billion) International Window of the Environmental Transformation Fund designed “to reduce poverty through environmental protection.”[148]  The fund is jointly managed by the DFID and DECC and its use must meet two criteria: “it must be scored as Official Development Assistance (ODA) and capital investment.”[149]  The DFID has committed £400 million to this fund.[150] 

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Prepared by Clare Feikert-Ahalt
Senior Foreign Law Specialist
October 2011

[1] Keeping the Promise: United to Achieve the Millennium Development Goals, U.N. GAOR, 65th Sess., 9th plen. mtg. at 12–19, U.N. Doc. A/res/65/1, N1051260.pdf.

[2] Department for International Development, Statistical Release: Provisional UK Official Development Assistance as a Proportion of Gross National Income, 2010, Statistical-Release-Provisonal-UK-ODA-Table.xls.

[3] Id.

[4] Who we are and what we do, Department for International Development, (last visited July 5, 2011).

[5] House of Commons, Draft International Development (Official Development Assistance Target) Bill, 2009–10, H.C. 404, at 3, cmintdev/404/404.pdfSee also Secretary of State for International Development, The International Development (Official Development Assistance Target) Bill, 2009–10, Cm. 7792, 7792/7792.pdf.  

[6] It has been noted that “[s]ome were critical of the decision to introduced draft legislation, as a crowded legislative programme suggested it would stand little chance of reaching the statute book before the 2010 General Election.”  House of Commons Library, Aid: Meeting the 0.7% of UK national income target by 2013 & proposed legislation, House of Commons Library Standard Note, 2010, SN03714, at 12,

[7] Id. at 15.

[8] David Williamson, Police applaud MP for criticising foreign aid, WalesOnline (Aug. 2, 2011), also Department for International Development, Aid Under Pressure: Support for Development Assistance in a Global Economic Downturn, Fourth Report of Session 2008–09, 2008–09, H.C. 179-I,

[9] Secretary of State for International Development, supra note 5, at 4.

[10] House of Commons Library, supra note 6, at 15, citing Queen’s Speech, International development spending from 2013, Number 10 website (May 2010).

[11] Charities Aid Foundation, UK Giving 2010 at 21 (Dec. 2010), /UK%20Giving%202010_101210.pdf.

[12] Id.

[13] Id.

[14] Department for International Development, Annual Report and Accounts 2010–11, vol. 1, HC 989-I, 2010–11, at 4,

[15] Id.

[16] International Development Act 2002, c. 1.  This Act repealed and replaced the Overseas Development and Co-operation Act 1980, c. 63. 

[17] International Development Act 2002, Department for International Development, (July 13, 2011). 

[18] International Development Act 2002, c. 1, § 1.

[19] Department for International Development, supra note 17. 

[20] Danielle Goldfarb & Stephen Tapp, How Canada Can Improve Its Development Aid: Lessons from Other Aid Agencies, BNET (Apr. 15, 2006),

[21] History, Department for International Development (last visited Aug. 16, 2011). 

[22] DFID has stated that its humanitarian assistance “is guided by the core principles of humanitarianism set out in the Principles for Good Humanitarian Donorship, namely humanity (the centrality of saving human lives and relieving suffering wherever it is found); neutrality (humanitarian assistance should not favour any side in an ongoing conflict); and independence (humanitarian objectives should be independent of any political or military objectives).  Humanitarian assistance should be designed as far as possible to complement and pave the way for other forms of engagement.”  Department for International Development, Working Effectively in Conflict-affected and Fragile Situations, Mar. 2010, Briefing Paper G, governance/Building-peaceful-states-G.pdf.

[23] The British overseas territories are Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn Islands, St. Helena and Dependencies, South Georgia and the South Sandwich Islands, the Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus, and the Turks and Caicos Islands.  List of Crown Dependencies & Overseas Territories, Foreign and Commonwealth Office, (last visited Aug. 30, 2011). 

[24] International Development Act 2002, c. 1, §§ 2-3.

[25] Department for International Development, supra note 17.

[26] Id

[27] International Development Act 2002, c. 1, § 1(2). 

[28] The term sustainable development is, however, clarified in the Act to ensure that it is not interpreted too narrowly.  It “includes any development that is, in the opinion of the Secretary of State, prudent having regard to the likelihood of its generating lasting benefits for the population of the country  . . . in relation to which it is provided.”  International Development Act 2002, c. 1, § 1(3).

[29] International Development Act 2002, c. 1, Explanatory Notes, ¶ 18. 

[30] Owen Barder, Reforming Development Assistance: Lessons from the U.K. Experience, Center for Global Development: Working Paper 70, Oct. 2005,

[31] International Development Act 2002, c. 1, Explanatory Notes, ¶ 23. 

[32] International Development Act 2002, c. 1, § 5. 

[33] Id. § 6. 

[34] Id. § 1.  See also Department for International Development, supra note 14, ¶ 1.6. 

[35] Barder, supra note 30.

[36] Department for International Development, supra note 4.

[37] Department for International Development, DFID in 2009–10: Response to the International Development (Reporting and Transparency) Act 2006 (2010), publications1/departmental-report/2010/dfid-in-2009-10-revised-6-sept-2010.pdf.

[38] International Development Act 2002, c. 1, § 1.  See also Department for International Development, supra note 14, ¶ 1.7. 

[39] Department for International Development, supra note 17. 

[40] Department for International Development, supra note 21.

[41] IdSee also Barder, supra note 30.

[42] Department for International Development, supra note 4.

[43] Barder, supra note 30, at 21. 

[44] Id. at 14.

[45] Id.

[46] Id. (citing Robert Greenhill, Making a Difference: External Views on Canada’s International Impact (Global Voices Project: Interim Report, Jan. 2005), dspace/bitstream/10625/33024/1/120694.pdf

[47] Id. (citing Aid Policy, The Economist, Oct. 31, 2002). 

[48] These bodies are the British Tourist Authority; a Health Authority, a Health Board, a National Health Service Trust, a Primary Care Trust, the Public Health Laboratory Service Board, a Special Health Authority, a Special Health Board, and the Wales Tourist Board.  International Development Act 2002, c. 1, § 9.

[49] If the agreement involves Scotland or Wales, the appropriate devolved body must also provide their consent.

[50] International Development Act 2002, c. 1, § 9.

[51] Department for International Development, Departmental Report 2005, 2006, Cm. 6354, ¶ 6,

[52] Department for International Development, Working Effectively in Conflict-affected and Fragile Situations Briefing Paper C: Links between Politics, Security and Development, 2010, Documents/publications1/governance/building-peaceful-states-C.pdf.

[53] Barder, supra note 30, at 19.

[54] Conflict Pool, Foreign and Commonwealth Office, (last visited Aug. 24, 2011). 

[55] Department for International Development, Foreign and Commonwealth Office, Ministry of Defence, Conflict Pool Annual Report 2009/2010, 2010, at 1,

[56] Id. at 47.  

[57] Department for International Development, Departmental Report 2006, Cm. 6824, 2006, ¶ 7.13,

[58] What is Stabilisation, Stabilisation Unit (Foreign and Commonwealth Office, Ministry of Defence and UKAid), (last visited Aug. 22, 2011); Cabinet Office, The National Security Strategy of the United Kingdom, 2007–8, Cm.7291,

[59] Who DFID works with, Department for International Development, About-DFID/Quick-guide-to-DFID/Who-DFID-works-with (last visited Aug. 16, 2011).

[60] Id.

[61] Barder, supra note 30, at 16.

[62] See, e.g., the following statutory instruments implementing a number of UN sanctions that served to restrict transactions with Iraq:  The Iraq (United Nations Sanctions) Order 2000, SI 2000/3241, and the Export of Goods (Control) (Iraq and Kuwait Sanctions) Order 1990, SI 1990/1640.

[63] Statement by the Secretary of State for International Development, the Bilateral and Multilateral Aid Reviews (Mar. 1, 2011),

[64] Id.

[65] Id.

[66] The Afghanistan Crisis, Department for International Development (Oct. 2001), available at

[67] Id.

[68] Id.

[69] Barder, supra note 30, at 24.

[70] Stabilisation Unit, supra note 58.

[71] Department for International Development, Eliminating World Poverty: Making Globalisation Work for the Poor, White Paper on International Development, 2000, Cm. 5006, ¶¶ 320–322, 2000.pdf.

[72] Id. ¶ 323.

[73] Department for International Development, supra note 17.

[74] Id

[75] Sir John Vereker, Blazing the Trail: Eight Years of Change in Handling International Development, 20 Dev. Pol’y Rev. 133 (2002).

[76] Barder, supra note 30.

[77] Id. at 21.

[78] Press Release, Department for International Development, Untie all development assistance to make it more effective, says Short (Dec. 11, 2000), available at

[79] Department for International Development, supra note 14, at 166. 

[80] Id.

[81] Department for International Development, supra note 14, at 96.

[82] Enquiry into Preparing for the Humanitarian Consequences of Possible Military Action Against Iraq, International Developmental Committee (Feb. 2003), available at http://webarchive.national

[83] International Development Committee, DFID’s Performance in 2008–09 and the 2009 White Paper, 2009–10, H.C. 48-II, at Ev 12, Q52, cmintdev/48/48ii.pdf

[84] Foreign and Commonwealth Office, supra note 54. 

[85] Development Act (Reporting and Transparency) 2006, c. 31.

[86] Barder, supra note 30, at 14.  See also Development (Reporting and Transparency) Act 2006, c. 31.

[87] The UKAid Transparency Guarantee, Department for International Development (June 3, 2010),

[88] UK Aid Transparency Guarantee, Department for International Development, (last updated Nov. 17, 2010). 

[89] Department for International Development, Annual Reports and Accounts, H.C. 989-II, 2010–11, ¶ 5.5.1,

[90] Id. at 32.

[91] Id. at 33.

[92] National Audit Office, (last visited Aug. 25, 2011). 

[93] Barder, supra note 30, at 29.

[94] International Development Act 2002, c. 1, § 6.  See also International Development Committee,, (last visited Aug. 24, 2011).

[95] Role and core values, Independent Commission for Aid Impact, http://icai.independent. (last visited Aug. 24, 2011).

[96] Founding Documents, Independent Commission for Aid Impact, http://icai.independent. (last visited Aug. 25, 2011).

[97] Id.

[98] Id.

[99] Assessing progress on implementing the Paris Declaration and the Accra Agenda for Action, OECD,,3746,en_2649_201185_43385196_1_1_1_1,00.html (last visited Aug. 24, 2011).

[100] Department for International Development, supra note 89, ¶ 5.5.1.

[101] OECD, supra note 99.  Information on the UK and its progress toward the targets set by the Paris Declaration is available at: Department for International Development, Annual Reports and Resource Accounts, H.C. 867-II, 2008–09, annex F,

[102] Barder, supra note 30, at 15.

[103] Id.

[104] Id. at 26.

[105] See, e.g., Department for International Development, supra note 21.

[106] Id.

[107] House of Commons Library, The bilateral and multilateral aid reviews, Standard Note, SN/EP/5906, 2011,

[108] IdSee also Barder, supra note 30, at 17.

[109] Barder, supra note 30, at 17.

[110] Department for International Development, UKAid: Changing lives, delivering results, 2011,

[111] Secretary of State for International Development, Eliminating World Poverty: A Challenge for the 21st Century, Cm. 3789, 1997, ¶ 2.21,

[112] Id. ¶ 2.22.

[113] Barder, supra note 30, at 16 (citing Aid Policy, The Economist, Oct. 31, 2002, at 18).

[115] Giving to charity through Gift Aid, Her Majesty’s Revenue and Customs, uk/individuals/giving/gift-aid.htm (last visited Aug. 31, 2011).  

[116] Budget, Her Majesty’s Treasury, (last visited Aug. 29, 2011).  See also Erskine May, Erskine May’s Treatise on The Law, Privileges, Proceedings and Usage of Parliament 910 (Sir. William McKay et al. eds., 23rd ed. 2004).

[117] Department for International Development, supra note 89, at 54.

[118] Id. at 1.

[119] Her Majesty’s Treasury, supra note 116, ¶ 6.20.

[120] Her Majesty’s Treasury, Press Release 06/10, Speech by the Chief Secretary to the Treasury, Rt Hon David Laws MP, announcing £6.2 billion savings (May 24, 2010).

[121] Her Majesty’s Treasury, Budget 2009: Building Britain’s Future, 2009, 2008-09, H.C. 407, at 131, also House of Commons Library, supra note 6.

[122] Addendum to DFID’s Value for Money (VfM) Delivery Agreement, Department for International Development, Apr. 22, 2009, available at also House of Commons Library, supra note 6, at 8.

[123]Tier 2 (Minister of Religion), UK Border Agency,  (last visited Aug. 29, 2011).

[124] Id..

[125] Commonwealth Scholarships – developing Commonwealth country citizens, Commonwealth Scholarship Commission in the United Kingdom, (last visited Aug. 29, 2011).

[126] Id.

[127] Cabinet Office, supra note 58, ¶ 3.52.

[128] Department for International Development, supra note 8, ¶ 14.

[129] House of Commons Library, Migration and Development; The role and impact of remittances, House of Commons Library Standard Note, SN/EP/3925, 2008, at 6.

[130] The Payment Services Regulations 2009, SI 2009/201, ¶¶ 36, 49, si2009/uksi_20090209_en_6#pt5-pb4-l1g49.

[131] Department for International Development, supra note 14, at 34.

[132] Liberia ordered to pay ‘vulture funds’ over 1978 debt, BBC News (Nov. 26, 2009), uk/2/hi/africa/8380117.stm.

[133] UN expert on foreign debt regrets British court order that Liberia must pay 1978 debt to ‘vulture funds,’ United Nations Human Rights, Dec. 17, 2009, aspx?NewsID=9689&LangID=e.

[134] Debt Relief (Developing Countries) Act 2010, c. 22, Explanatory Notes, ¶ 5, http://www.legislation.

[135] A list of qualifying countries is available at: International Monetary Fund, Debt Relief Under the Heavily Indebted Poor Countries (HIPC) Initiative, IMF (Sept. 6, 2011), exr/facts/hipc.htm.

[136] House of Commons Library, Debt relief & ‘vulture funds’: the Debt Relief (Developing Countries) Act 2010, Standard Note, SN/EP/5658, 2010,  

[137] Debt Relief (Developing Countries) Act 2010, c. 22, 2010/22/contents.  For an overview on the passage of the bill through Parliament, see id.  

[138] Debt Relief (Developing Countries) Act 2010, c. 22, § 1, 2010/22/contents.

[139] Gavin McLean & Francis Fitzherbert-Brockholes, The UK Debt Relief (Developing Countries) 2010 Act: Causes and Effects, Insight: Capital Markets (Aug. 2010), 19c117d7-95d1-4e93-ad26-48c5a2d9f9a2/Presentation/PublicationAttachment/de49d681-2136-444e-b9f1-4fd01d7bdb07/alert_Vulture_Funds_v1.pdf.

[140] The government reportedly chose not to apply the law to debts incurred after this date because, in the absence of similar legislation in other major financial jurisdictions (notably New York), a forward-looking application of the law covering future indebtedness would chill the degree to which sovereign lenders and creditors would choose English law to govern future debts.  Id.

[141] Id.

[142] Id.

[143] Debt Relief (Developing Countries) Act 2010, c. 22, § 6, ukpga/2010/22/contentsSee also id.

[144] ‘Vulture Funds’ – UN Expert on Foreign Debt Welcomes Landmark Law to Address Profiteering, United Nations Human Rights (Apr. 20, 2010), NewsID=9976&LangID=E

[145] Overview, IFFIm, (last visited Aug. 29, 2011).  

[146] Department for International Development, supra note 89. 

[147] Id.

[148] Id.

[149] Id.

[150] Id.

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Last Updated: 06/09/2015