Department for International Development merger with Foreign and Commonwealth Office: Let us learn from our past

On June 16th, UK Prime Minister Boris Johnson announced his decision to the House of Commons to merge the British Department for International Development (DFID) and the Foreign and Commonwealth Office (FCO). This decision is not a complete surprise, given that Mr Johnson openly sought to persuade Theresa May to give him the aid department in 2016 after he became foreign secretary. 

DFID has a long history of being merged with and separated from the FCO. Although DFID was originally created as a separate department by Harold Wilson’s Labour government in 1964, it was merged with the Foreign Office in 1970 under Ted Heath’s Conservative government. Mr Wilson later re-established it as a separate ministry after his return to Downing Street in 1974, but Margaret Thatcher merged it with the Foreign Office once again in 1979. DFID obtained its current name and independent status in 1997 under Mr Blair. 

Given Mr Johnson’s decision to merge, let us look back at the cause behind the separation of the two departments in 1997: the Pergeau scandal. In 1988, Secretary of State for Defense George Younger and the government of Malaysia agreed for the UK to provide 20% of the value of its weapon sales to Malaysia in aid. This aid took the form of the construction of the Pergau Dam. The dam had been previously assessed by economists and engineers of the Overseas Development Administration (UK’s development arm at the time, when it reported to the Foreign Secretary) as not being cost-effective. In fact, it was estimated that it would increase the cost to Malaysia of producing electricity. Nevertheless, Douglas Hurd, Foreign Secretary at the time, driven by trade interests, decided to proceed. Several years and hundreds of millions of pounds later, the High Court ruled that the agreement was unlawful. As a consequence, Clare Short, the UK’s first Development Secretary, announced in 1997 that development aid should not be sullied by considerations other than poverty reduction

The separation of DFID and the FCO as a result of the Pergeau Dam case has yielded several positive outcomes. Over the years, DFID has gained a strong reputation for transparency, impact, and value for money. This is reflected by its ranking in the aid transparency index which, in 2020, ranked it 9th out of 47 global donors. The FCO, on the other hand, ranked 40th. 

Development experts and politicians now fear that the merger will cause DFID to lose its reputation and to operate less transparently. Sarah Champion, chair of the International Development Committee, declared that 

“Merging these departments may seem attractive short-term with possible administrative efficiency gains, but in the long run, we will have shot ourselves in the foot on the world stage.” 

Ex-Prime Minister David Cameron stated the merger would mean “Less respect for the UK overseas” while Tony Blair said he was “Utterly dismayed”. 

The announcement of the merger comes just days after parliament’s development watchdog recommended that DFID should retain its independence, and warned that any change to government structures would be highly disruptive. The disruptive nature of the change is especially worrying in the midst of the Covid-19 crisis and many have questioned the timing of Boris Johnson’s announcement. Mark Sheard, CEO of World Vision UK, reminded members of the UK public that they had already been warned that Covid-19 could set back global poverty levels by 30 years. He stated that “The end of an independent DFID will drive us even further backwards.” 

Sara Pantuliano, Chief Executive of the Overseas Development Institute, pointed out that 

“Departmental mergers are complex and time-consuming exercises. So doing this in the middle of the Covid-19 pandemic is very strange. The government should be focusing on helping poorer countries to weather the crisis and solving mounting global challenges like climate change rather than rearranging the bureaucratic furniture.”

Looking to the future, we agree with Sara Pantuliano that there is an imperative to preserve and champion development expertise in the new department. Development assistance must not be politicised and UK aid — indeed, any aid — must continue to support the most vulnerable, disadvantaged and marginalised.

Links and references

A complete list of references for this blog post is available in our evidence library: https://docs.opendeved.net/lib/59IIRL94.

Bond. (2018, June 19). DFID rated “very good”, FCO “poor”, in aid transparency index [Text]. https://www.bond.org.uk/news/2018/06/dfid-rated-very-good-fco-poor-in-aid-transparency-index

Ford, L. (2020, June 16). ‘Political vandalism’: DfID and Foreign Office merger met with anger by UK charities. The Guardian. https://www.theguardian.com/global-development/2020/jun/16/political-vandalism-dfid-and-foreign-office-merger-met-with-anger-by-uk-charities

Mason, P. (2019, June 4). Opinion: Remember Pergau. Devex. https://www.devex.com/news/sponsored/opinion-remember-pergau-95026

McVeigh, K. (2020, April 29). Coronavirus ‘could undo 30 years of UK’s international development work’. The Guardian. https://www.theguardian.com/global-development/2020/apr/29/coronavirus-could-undo-30-years-of-uks-international-development-work

Perakis, R. (2012). Getting the Facts Straight: Pergau Dam and British Foreign Aid. Center For Global Development. https://www.cgdev.org/blog/getting-facts-straight-pergau-dam-and-british-foreign-aid

Prime Minister’s statement to the House of Commons. (2020, June 16). GOV.UK. https://www.gov.uk/government/speeches/prime-ministers-statement-to-the-house-of-commons-16-june-2020

Statement: DFID merged into FCO – ODI Response. (2020). ODI. https://www.odi.org/news/17049-statement-dfid-merged-fco-odi-response

Stewart, H., & Wintour, P. (2020, June 16). Three ex-PMs attack plan to merge DfID with Foreign Office. The Guardian. https://www.theguardian.com/politics/2020/jun/16/foreign-office-and-department-for-international-development-to-merge

UK aid department to be merged with Foreign Office. (2020, June 16). BBC News. https://www.bbc.com/news/uk-politics-53062858

Worley, W. (2020, June 16). Breaking: DFID merged with FCO. Devex. https://www.devex.com/news/sponsored/breaking-dfid-merged-with-fco-97489

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