Oral evidence: Reports on (i) Business in Development, and (ii) DFID’s Approach to Delivering Impact, HC 597Tuesday 10 November 2015

Oral evidence, 10 November 2015.

Witnesses

David Kennedy, Director General for Economic Development, Tony Burdon, Head of Private Sector Department, and Malcolm Greer, Deputy Head of Private Sector Department, Department for International Development, gave evidence.

Chair

Welcome, gentlemen. Our first question is from Helen Grant.

Mrs Helen Grant

Hello, everyone. I have four questions in succession and it might be easier, because they are quite detailed, to take them one at a time. The first question is: in which countries is DFID’s engagement with business working best and are there any lessons to be learned? I do not mind who answers or whether you all want to say something.

David Kennedy

Let me make a start. Can we come at that from a slightly different angle, in the sense that there are lots of different ways we interact with business?

Mrs Helen Grant

As long as you answer the question, you can take it from whatever angle.

David Kennedy

The first thing to say is we have relationships with business in this country, the big corporate relationships. Is that working well? In some circumstances, yes, and in others not. For example, we have partnerships with Unilever that are resulting in action and then there are a lot of partnerships that we want to find a way to energise and give purpose. That is one of the things we are doing here. The second thing we are doing is engaging business here through a set of roundtables and, again, some of those work well and some of them do not. The extractors roundtable, the energy roundtable and the agriculture roundtable have all resulted in action, but some of them, frankly, are talking shops and that is not what we want. We are thinking about how we can do better there. There are networks here that we want to engage with. You can take the CBI as an example. You can take Mark Malloch‑Brown’s new group, which is business working to implement the global goals. Frankly, there is more that we can do there. If you get into countries and what we do in countries, we work very closely with business, probably in a much more extensive way than is covered in this report, across the range of our programmes, whether that is economic development, which is what I lead, or whether it goes beyond economic development into health and education. There is extensive interaction. I do not think we can say if it is working better in Ghana versus Nigeria versus whatever country. There is extensive interaction. One of the points raised in the report from ICAI is whether we have a good way of measuring how that interaction is working in practice and what results it is giving rise to as well, which is what we have just been talking about with the previous panel. The answer is that we need to be much more systematic in that. We can give you some good examples of where we are working with business, if that is what you would like to hear from us.

Mrs Helen Grant

It is about what elements make it work well. It may well be the interaction, the communication or just the gelling. I do not know. I am just interested to know what factors make it work rather than the fact that some work and some do not.

David Kennedy

What does not work well is that we are expected to talk to the private sector, so we invite them in, have a very transactional conversation, tick the box that we talked to the private sector and then forget about it. That does not work well, clearly. What we are trying to do is, as I have said, engage with purpose. We know what the private sector values from us, and we know this because we hired PwC and asked them to talk with a whole range of investors about what they are looking for from DFID. They want to understand what we are doing. They want to help inform what we are doing. They want to be able to tap into our networks and they want to be able to work as a partner with us. If you use those things as a guide to how we should interact with meaning and purpose and you transplant that to the country level, we need to go out and find the private sector partners. We need to not talk at them but talk to them, to be in listening mode and then to work in partnership to find what we can do usefully together. That is basically the approach, but again, if you come back to whether it always works in practice, we cannot confidently say it always works in practice, so we need to be more systematic: systematic both in design of the approach and also then in monitoring the approach and the results, with all the complexities that measuring results entails.

Mrs Helen Grant

Making sure that there is something in it for both sides.

David Kennedy

Yes.

Mrs Helen Grant

What level of detail do DFID’s existing operational plans go into and is there scope for making them more detailed perhaps?

David Kennedy

Last time I came before this Committee to give evidence, we talked about the coherent strategic approach that we were trying to develop and we mentioned the growth diagnostic, which is our key analytical tool, which flows right through to the operational plans. We have made a lot of progress now. We had a tool the last time I spoke to you. We had not used the tool; we had not rolled it out, but now this tool is being used by all of our country offices and all of our departments working on economic development to identify the priorities and where we can add value in this space. That is the starting point. You go from the growth diagnostic to the period we are in at the moment, which is the bilateral aid review and the multilateral aid review, which are the strategic processes to say how we are going to spend the money over the next period. We are right in the middle of that, so that will conclude in the next several months. Coming out of that, we will have detailed operational plans about what we are going to do across the whole set of sectors where we are involved, including economic development and working with the private sector. Those will be at a level of detail. They are necessarily still reasonably high‑level, the operational plans, because they are strategies and strategies, by their nature, are high‑level documents. Those need to be translated then into the detailed programming that we will do.

Mrs Helen Grant

Are you saying they are detailed enough really or does more detail need to be put in? I am not sure what the conclusion was on that, David.

David Kennedy

Tony, do you want to come in and say what level of detail we go into in the operational plans?

Tony Burdon

I think sufficient. It is a broad level of detail, but underpinning it is lots of analysis. When we did the inclusive growth diagnostics, we looked at what was stopping growth in these countries, how we create more and better jobs and raise the incomes of poor people, what the barriers are. Then we identified what we can do about that, what the opportunities are, what other donors are doing, what the Government is doing and, therefore, the niche for DFID. In the spending review process, we will be given our allocations and a steer on direction, and that detailed analysis then forms the foundation of our business plan for each country or central department working on economic development issues, for instance. That is quite a strong level of detail.

Mrs Helen Grant

Yes, thank you.

David Kennedy

It will say, “These are the areas we are going to focus on in the countries that have come through this process.” Let us take an imaginary country: “We will focus on commercial agriculture, small business development, through whatever levers we will pull there, and energy, working with the Government and the regulators.” It will be at that level of detail, the kind of objectives we want to achieve and then the programming will go into much more detail, including the results that would come from that programming.

Mrs Helen Grant

You are happy with the working of your diagnostic. It is working well, useful, good.

David Kennedy

Yes. It would have been a leap of faith last time to say we were happy, because we had not rolled out the diagnostic. One thing that was raised in the previous discussion was that DFID can be a bit siloed. This was a process that had to pull together all of the different departments at the centre and in the countries. In fact, it has worked well and it is a really good model, and we have external evidence for that. For example, at the World Bank, top economists have looked at this and said it is state of the art, cutting edge, analytical, strategic thinking.

Mrs Helen Grant

Great, thank you. I have a couple more. You have pledged a large amount of additional funding to the CDC Group. Why has this been done?

David Kennedy

Basically, we think it offers really good value for money. It is important to say that the CDC has been on a journey over the last few years. If it was five years ago, I do not think we would have wanted to recapitalise the CDC, but over the last few years we have completely replaced the board, first of all, then replaced the management and then replaced all of the staff. There are very few CDC staff now who were there five years ago, so it is a new organisation in that sense. It is a new organisation because it has a different geographical focus. It works much more in difficult countries and not in China, for example. It is no longer a funder of funds, which was its main business. It does direct investments. It does those both in equity and debt. It is a completely transformed organisation.

Mrs Helen Grant

Just on that point, the last panel of witnesses mentioned, in relation to CDC, they felt that there was perhaps a lack of commercial investment experience. What do you say to that?

David Kennedy

I think the point was that there is a lack of commercial investment experience in DFID rather than CDC.

Mrs Helen Grant

You are quite happy that, on the CDC board, there is sufficient commercial investment experience.

David Kennedy

Yes. CDC is a commercial bank with a development mandate, but it is staffed by commercial bankers and the people on the board all come from a commercial banking background, so there is no shortage of commercial experience there. I think there was a question there about how much expertise there was on our investment committee, which is the DFID investment committee. There was also a question raised last time about how much financial and transaction expertise we have in DFID. That is a really important point.

Mrs Helen Grant

In DFID, do you feel you have sufficient?

David Kennedy

It is not true to say we do not have any expertise; we do. We have hired a small team of people with a financial background and we are in a good positon now to be able to oversee our investment in CDC. There is a question going forward, which is: if we step up very significantly our development capital investment—and that is a likely outcome of the spending review, so the Treasury will look for us to do that—do we have the capacity in DFID to oversee that step up? I think the answer is no; that is pretty clear. Then there is the question: what do we do about it? Do we hire a load of investment bankers to work in DFID? I think the answer is no; that is not practical. We will contract out the transactions. There is a question over whether we have sufficient capacity to do oversight of that contracting out and there are different ways of doing oversight: we could contract out the oversight of those transactions; we could hire people, and we probably will do a bit of both. That is a little bit on hold until we know what is happening in the spending review, which we will find out in the next two or three weeks.

Mrs Helen Grant

Tony or Malcom, do you have anything to add to that?

Malcolm Geere

Part of my role as deputy head in the private sector department is resourcing the team and, as David mentioned, I can list at least four people over the last 12 months whom we have brought in directly from the financial sector, from Barclays Capital, from Standard Chartered, from PwC and from Ernst & Young, and it is not that easy. We do not compete with the financial sector on terms and conditions in the civil service. Having said that, when we have gone out to recruit, we have attracted good lists of candidates, so we know we can do it. It takes a little longer than recruiting from within the civil service, but we know we can do it. We have also been finding other ways of bringing in expertise when we have needed to. A director from GSK has been working in our health department on medicines. We have an EY director who has been helping us develop the governance framework for our development capital portfolio. We currently have under contract one of the members of the ICAI team who wrote part of the report on LEG and who is working on reviewing CDC’s strategy for us. We know we can access skills at short notice, but also longer term we know we can bring people in.

David Kennedy

Do you want to mention Ernst & Young when we asked them if we have the capacity to oversee what we are doing?

Malcolm Geere

Last year, Ernst & Young conducted a skills audit of the whole of DFID, to identify where there were people with specialist financial sector expertise or investment expertise, or suitable accountancy or audit experience. They looked right across the organisation and identified the people, and it was not a vast number—it was in the dozens rather than in the hundreds—but there were people within the private sector department, in our central finance section, in the climate and environment department, which also manages some investment programmes, and in DFID India, where they do not have the difficulty we have in recruiting people on civil service terms away from the financial sector. That report concluded that we were suitably staffed for the stage of rollout of our development capital plans, which we took to mean that, if we had gone through an extensive recruitment process at that point and brought a load of financial sector experts into DFID, they would have been underemployed; they would not have had a lot to do at that stage. We are aware that, if plans change after the spending review, we are likely to need to recruit more people, but we know that there are ways that we can do that.

David Kennedy

If we get a big target in this area from the spending review, you would want to make sure that we are resourcing adequately to that and at the moment we are saying, frankly, we are not adequately resourced for that step up in the future.

Mrs Helen Grant

But you would accommodate that, should you need to.

David Kennedy

We would not want to step up if we did not have the capability to oversee what we are doing, no.

Mrs Helen Grant

No, I know, but I said if you need to.

David Kennedy

Right.

Mrs Helen Grant

In relation to the work that DFID is doing with business, is there added value happening in terms of what business would have done in the first place? I am probably not explaining myself very well. Obviously DFID works with business; yes, there is added value, but is there value over and above what business might have done initially?

David Kennedy

Let me have a quick go and then I can open it up to Tony and Malcolm. If we are talking about additionality, the specific thing that you touched on in the previous session, it is absolutely central to all of our thinking about development capital investment or what the report called LEG—loans, equity and guarantees. Clearly, if the private sector will do something, then we should not be there. We should not be displacing private sector activity. That would not add any value from our perspective and so we are very careful. For example, a lot of our discussions with CDC are about additionality. Now, it happens to be the case that, if you push CDC to invest in more and more difficult countries, the likelihood is they will be additional, because there is a lack of patient capital in the more difficult countries and that is how we are pushing CDC. That kind of says not that you can be complacent about additionality, but probably, in many cases, you will be additional. A lot of the discussion we have with CDC is about how we can measure our additionality. How can we have checkable stories that say, unless we were present, this would not have happened? We have had the same discussions with PIDG and we have a set of criteria that are used for all of the CDC investments. That discussion on additionality is not finished. We are going through a CDC strategy review and one of the key elements of that will be additionality and ensuring that they are only doing things that the private sector would not do. There is a different question, which is about how what we do unlocks private sector activity that would not have otherwise happened, which is all the work we do in our country programmes.

Tony Burdon

One of the biggest constraints is the lack of investible projects in many of the countries that we work in. Our job, if we want to end poverty in those countries, is to get more private sector activity. With CDC or with development capital, we can try to push it into more risky areas where the private sector is not present now or is unwilling to go, show that it is possible and then attract the private sector into those areas. That is the challenge. Alongside that, there is our other complementary activity, which is improving the regulatory environment, cutting red tape, helping Governments get the right environment for the private sector, tackling governance challenges, helping to get the infrastructure in place so that the private sector is more readily able to go into those areas. There is a range of actions across the piece that we need to do, but we are working in some of the hardest countries in the world where the private sector is very loth to be active, so our job is to try to pull them in through example.

Malcolm Geere

We have been talking about additionality in the investment space, but there is also a really good example in terms of some of the other ways that we have been engaging with business. The much touted example of M‑Pesa in Kenya came from a challenge fund grant to innovators within Vodafone who had an idea but did not have the space within their organisation to roll that out. That was a major success story. That was 15 years ago or so. Things have changed now. The space has changed. There has been a big autonomous movement within multinationals and other businesses to develop profitable solutions to development challenges as a way of accessing new markets. That does not necessarily require grants through challenge funds. That requires a different approach, so we have moved away from the challenge fund approach and are now reconsidering what our niche is in terms of encouraging innovation, encouraging firms to scale up that innovation and then other firms replicating it. We recognise that that is a changing space and the additionality question today is not going to look the same in five years’ time.

Chair

Could I ask you a final question before we move to the next panel and the next report? Are you confident that your strategy in working with business in development is overcoming and continues to overcome extreme poverty, because in the end that is what you are about?

David Kennedy

I am confident that it delivers that. Am I confident that it is as good as it could be? The answer is no. We have to do better and there are a number of things that we are very actively involved in at the moment. We are developing a new business engagement strategy, which we will launch in the next month. That is the intention and that is looking at how we can engage again with meaning and purpose that leads to impact rather than talking shops and box‑ticking. That is the first thing. Secondly, we will publish an economic development strategy including the results framework. The intention is to do that in the spring. Again, we are working through what the portfolio shifts are that will give us better value for money, so moving to more of energy, urban, agriculture. There are a number of active areas where we are trying to push the boundaries and get better in order that we can have more impact. We are not there yet. We want to do better, but we are in a reasonable starting position to do that.

Chair

Malcolm, David, Tony, thank you very much indeed. I am sorry we are out of time. Can we move on to our next and final panel, please, on DFID’s approach to delivering impact? Examination of Witnesses

Witnesses

Les Campbell, Director for Value for Money, and Peter Taylor, Deputy Head of Better Delivery Department, Department for International Development, gave evidence.

Chair

Gentlemen, thank you very much for joining us today. This is our last session before we have to vote at 6 o’clock and Fiona Bruce is going to ask you the first question.

Fiona Bruce

In its report, ICAI says that you need to have a results framework that better captures and measures transformative impact. Assuming you accept that and, therefore, the need to review your processes to encourage longer‑term and harder‑to‑measure results, I wonder whether each of you could give me some examples of where, since the report was produced, you have done this and tell me something about the way that you have changed the wording of the goals involved.

Les Campbell

Thank you for that and good afternoon. Perhaps I could put the results framework in context. The overarching context is the single departmental plan, which we are in the process of revising and reviewing as part of the spending review. That sets out the objectives for the next five years. That is the very big picture, and then the results framework is something that we have in place, which we are revising just now, to look at how we can aggregate specific measures. That is largely numerical, because it is adding things up that we can aggregate. Then, if you want to drill down into the impact, you have to get into the specific programmes and projects. That is where some of the wording can change and pick up more of the qualitative and the long‑term nature of what we are doing. That is more within the projects and the programmes element, as well as in that hierarchy of moving up through the results framework into the overall single departmental plan. We are looking at the results framework and taking on board the comments from ICAI, and we will be launching that over the next few months, once we have the single departmental plan in place, so it is still a bit of a work in progress at the moment.

Fiona Bruce

That report was in June, so you are saying you still have not changed your processes as a result.

Les Campbell

No. We have been reviewing the process and we welcome the report and the comments on the results framework. We have not finalised the outcome of that framework until we have the single departmental plan in place.

Fiona Bruce

You say you welcome them; do you accept them? Do you accept the comments made by ICAI in the report?

Les Campbell

Broadly, we do. We accept that we need both the long‑term qualitative as well as the long‑term quantitative. I do not think it is an either/or; we need both. We also need to focus on the results and the short term, because we have the process of adaptive programming, so we are constantly looking for feedback and changing what we do in the short term, but with a view to moving and achieving our long‑term objectives. There is a bit of both, and that is what we are changing. That is what we are moving towards, and you will see that more clearly when we issue our new results framework in the new year.

Fiona Bruce

When exactly in the new year?

Les Campbell

It will probably be March, April time. We will issue our single departmental plan probably in December together with other Government Departments and then we are working through, as David Kennedy referred to earlier, the bilateral aid review and the multilateral aid review. The outcome of that will come together and will help to inform the new results framework.

Fiona Bruce

That is nine to 10 months from when this report was published. Do you think that is an adequate sense of urgency?

Les Campbell

In terms of what we are doing to amend the process and the thinking, we are doing that now, but we do only issue a new framework relatively infrequently. We were not planning on revising and reissuing our results framework, but the thinking that goes into it and looking at bringing in the qualitative and the quantitative is happening now. It is just that you will not see the outcome in the new framework until next year.

Fiona Bruce

How will you ensure that there is a less patchy quality of oversight, which you will have heard the evidence refer to earlier? How will there be learning?

Les Campbell

Over the last year, 18 months, we have brought in Smart Rules, which I think you have heard reference to before. That is our operating framework at the programme level, and I will ask Peter to talk a little more about that. There is an extensive array of training and communication for our senior responsible owners who are running each of the programmes to make sure that the quality is sufficient, to make sure that learning does transmit across the organisation. We are putting in improved training and there is internal communication; we are picking up learning, picking up beneficiary feedback, and that is a constant process.

Peter Taylor

As you say, it is a long‑term process. We are trying to get the systems right, the rules right. Les mentioned the Smart Rules. Underneath the Smart Rules, there is a whole series of separate guidance, for example, to help DFID staff write business cases, to think about how they monitor programmes. Some of the former commissioners mentioned the recent documents that have come out to try to improve the way that we do things: for example, to improve getting beneficiary feedback through evaluations. We are also trying to step up our training at all different levels—senior responsible owners, all our programme managers as well—and to provide real learning across the organisation, as you have touched on already, so that we can pick out pockets of best practice, help to identify areas where things are not going quite so well and work in a more intensive way with those people. It is a question of structures, incentives, processes, materials, support, and it is an ongoing process.

Fiona Bruce

Do you think it was acceptable that an investment of £11 million was not visited for over a year and that that was one of the smaller investments that was not visited for over a year?

Peter Taylor

It is worth saying, as you are probably aware, DFID has 1,600 or so live programmes at any time and, within that, there will be subcomponents. For example, particularly with the centrally managed programmes—if I understood correctly, this was an example of a centrally managed programme—there may be dozens of individual projects underneath that programme. It is difficult for DFID staff to go out to every single one of those more than, say, once a year. Every single programme will be subject to a rigorous annual review, which will have either DFID staff involved directly in getting the feedback and going out to visit the project or the programme or that being subcontracted and then DFID staff reviewing the quality of that review. Yes, in an ideal world, DFID staff would get out to see every single programme on a regular basis. For programmes managed in‑country, that happens much more frequently. Most country offices will have a clear monitoring strategy with an agreed level of frequency of visits to programmes, but obviously for, centrally managed programmes where there may be dozens and dozens of individual projects, perhaps, within even one country, it is harder for DFID staff to do.

Fiona Bruce

How are you ensuring that, where there are these centrally run programmes, DFID really does have a hands‑on understanding of what is happening? You are saying that you are sending out subcontractors, but that is not the impression I had from the previous witnesses. The impression I had was that the programme had not been not visited at all.

Les Campbell

There is a range of ways that we monitor and evaluate the programmes, and each programme, in the business case, will have some thought given to how we do that. To an extent, it is horses for courses and what is most appropriate, but each one has a way of monitoring and evaluating it. That might be visits; it might be meeting whoever is running the centrally managed programme at the centre; or it might be getting information and feedback from beneficiaries. There is a range of ways of getting that data in and monitoring it. There are formal annual reviews where we, in effect, force the programme owner to report on that as well as doing that during the period.

Fiona Bruce

Are you satisfied that that is happening in an acceptable way or are you reviewing that as well, following this report?

Les Campbell

We are reviewing. We are in a learning mode. As Peter said, we are running 1,600 programmes. The Smart Rules is a relatively new process for us; we are 18 months into that. We are constantly reviewing that to see if the processes are working, learning from that and feeding that back in again.

Fiona Bruce

How many programmes have you reviewed and found to be completely unacceptable, so you have gone in and looked at reviewing fundamentally how they are undertaken?

Les Campbell

We have closed a number of programmes—I do not know if Peter has the detail—as a result of that. Some programmes are just not acceptable. They are not delivering or they are not functioning in the way that we want them to function. Part of the value for money approach is to say there might come a point where we just have to say enough is enough, it is just not working and we close it.

Peter Taylor

As I say, every programme will be subject to a full and rigorous formal annual review. There is a five‑point scoring system for that. Anything that scores particularly the lower two scores within that five‑point scale will be subject to increased scrutiny and the senior responsible owner for that programme will be asked to come up with some improvement measures, which will have to be set out in what is called a delivery plan, which monitors the implementation of the programme. If a programme continues to score badly, continues to be off track in terms of the stated objectives and milestones against the outputs, a decision can be taken to close it. If a programme no longer represents value for money or we consider that it will not continue to represent value for money, we will close it. There are plenty of examples of that.

Fiona Bruce

Are there traits that you have discovered, if you are closing programmes? I am interested to know how many you have closed. Do you know how many you have closed on this basis and what the traits are? Obviously, one needs to learn in the sense that you do not want to have more programmes of that nature put in place, do you?

Peter Taylor

We are just in the process of reviewing the figures at the moment. It depends what you mean by early closure. Sometimes they can be closed a month or two early; sometimes they can be closed a year or two early. It depends what your cut‑off point is. In terms of closed before the expected closure date when the business case was agreed, I think it is several hundred in last few years. We are just in the process of going through those. Some of them are quite marginal, as I say, by a month or two, so it is probably not a significant early closure. There are others. If you go to more than six months, then we are probably talking about dozens rather than hundreds. We are going through the numbers at the moment.

Fiona Bruce

How much money has been invested that you have decided has not produced value for money, say over the last year?

Peter Taylor

I would have to check those figures for exactly what that would show, but the initial preliminary analysis we have done suggests that we have stopped spending several hundred million pounds that we might otherwise have spent if those programmes had continued, because we decided that it was not good value for money. Are there any traits, you asked, that may characterise those? It varies. A lot of these tend to be in the most fragile, conflict‑affected states. For example, it might be somewhere like South Sudan where suddenly conflict flares up and what you thought you could deliver you can no longer deliver, so it does not make sense to continue with that. There are lots of reasons. Sometimes programme closure is because implementing partners are not performing. That is pretty rare, but it can happen. Otherwise it is external circumstances that mean you cannot deliver what you originally set out to deliver.

Fiona Bruce

You are in the process of producing a report on this.

Peter Taylor

We are just doing some internal analysis of that to get a better sense.

Fiona Bruce

Chair, it would be very interesting to receive a copy of that analysis.

Chair

I hope that you would let us see a copy, but I wonder also whether you could perhaps write to us when you have the figures collected. I appreciate the qualifications you have put on the reason for closing programmes, but nonetheless it would be interesting to this Committee and to the full International Development Committee. Can I ask you perhaps a last question here, unless my colleagues have anything else to add? We understand that DFID is exploring options for more flexible, adaptive programming. I wondered how that will fit in with existing result management processes.

Les Campbell

This is part of our Smart Rules approach, which is that adaptive programming. When we are designing a business case, we are constantly looking to see how we might amend that as the project takes place. We are looking at what milestones we might look at, which is the results aspect of it. At what point would we get an indication that something is going off track? What measures would we see? That is the results part of it that then allows us to adapt and to tweak what we are doing, to change what we are doing to keep it on track, recognising that there is normally an endgame in the project that we want to get to but there may well be different ways of achieving that. That is at the programme level, not at the results framework level, which is a higher level, but within the programme. Whether that is qualitative or quantitative results, what are those milestones that might give a signal that it is not working in some way? It is not the annual review, because the annual review quite often, frankly, would be too late for that. We would be looking at milestones in a shorter period, as part of that monitoring and evaluation process that I mentioned earlier, when we are designing the programme, to say what it is, how we would monitor that, what signals would alert us to needing to change and to put in some adaptation to the programme that we have set up. It is trying to get the link between the results and the adaptation.

Chair

Can you just tell us what log frames are?

Les Campbell

That is logical framework. Your next question is: what is a logical framework? That is the results chain. How does a results chain work for a particular programme? Ultimately, it is getting to what the impact is, but then breaking that down to say what the outcomes and outputs are. It is based on the theory of change. We are going into some programme for a reason, because we think this will have an impact on the lives of poor people. Well, in what way? The log frame then sets that out. The impact might be to improve infant mortality, and you could have measures for that. The outcome might be number of children inoculated and the output might be number of nurses trained to do that. It is working through that chain from the inputs we are putting in, which is primarily money, the activities taking place, the outputs that are delivered, the outcomes they achieve and then, ultimately, at some high level, the impact. Most of that is related to DFID, but when you get to the impact stage there are attribution issues. It might not just be DFID’s activities that are having an impact; it could be other partner countries or other partners. That is the log frame.

Chair

Thank you very much for explaining that.

Fiona Bruce

I just want to go back to evidence that you gave earlier. You said that over several years you had abandoned quite a large number of programmes. Presumably, bearing in mind that a small programme was described as £11 million, we are speaking of hundreds of millions of pounds of abandoned programmes. Is that right?

Les Campbell

That probably will be the case and it would be correct. Each year in our annual report and accounts we have to disclose what are termed as “losses”, and that is a much smaller number. That is wasted money, if you like, and that would not be in the hundreds of millions; that would be a much smaller number that will go public in the notes to our accounts each year.

Chair

Abandoned programmes are not necessarily wasted money.

Les Campbell

Some of it might be. I would be surprised if it was entirely wasted. It is simply going off track or has not achieved what we had hoped it would achieve. It would be wrong to say that is entirely wasted. That would be unusual. It maybe did not deliver as much as we had hoped it would and we do not see any sensible way of rescuing it, so at that point we would draw a line, start again and think about what we need to do in this country or in this sector.

Chair

Presumably, as Peter explained earlier, it is not necessarily because they were badly thought out programmes; it is because the circumstances on the ground may have changed with conflict and with political change in those countries.

Les Campbell

That is more likely. Out of the 28 countries that we operate in, 21 are defined as fragile and conflict‑affected states and we are moving more and more into that type of work in those areas.

Fiona Bruce

Perhaps this is something that we could revisit after the report.

Chair

Yes. Peter, Les, thank you very much indeed for your time this afternoon. Thank you to all our witnesses today. Apologies that we have to finish slightly early, but we are very grateful. It has been most helpful. Thank you to Daniel Whitford and Paul Hampson as well. Oral evidence: [Inquiry name], HC [XXX] 22