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International Development Act 2002

What can DFID fund?

• Broadly, what we fund already under current policies. In principle, any form of development assistance can be provided as long as its primary purpose is furthering sustainable development or improving the welfare of a population and there is a reasonable likelihood of this contributing to poverty reduction. The only exceptions are aid to the UK Overseas Territories, humanitarian assistance or contributions to Multilateral Development Banks.
• The Act is enabling legislation. It gives the Secretary of State authority to spend money for defined purposes. Once it is clear that the right purposes are driving the intention to assist, the means available are very wide.
• Development assistance to UK Overseas Territories is not required to satisfy the test of contributing to the reduction of poverty. Humanitarian assistance does not need to meet this test and does not need to be given for the purpose of furthering sustainable development or promoting welfare. Support for Multilateral Development Banks is the subject of separate powers in Part II of the Act.

What can’t DFID fund under the 2002 Act?

• Assistance provided primarily for purposes other than furthering sustainable development or promoting the welfare of people is not permissible even where poverty reduction is a secondary effect. So a policy of Aid Tying – where the primary purpose is to gain contracts for UK suppliers – would be unlawful. A conservation project whose main beneficiaries were, say, gorillas rather than humans would fall outside the powers of the Act, though if the project were redesigned with the primary purpose of generating economic benefits for the inhabitants of the region – through increased tourism or the preservation of essential resources – it could be lawful. Money given to failed asylum seekers for the primary purpose of encouraging them to leave the UK would be unlawful, but not assistance to displaced persons to return to their home country with the purpose of contributing to the development of that country.

So can I still fund activities, for example public sector reform, where the link to poverty reduction is indirect?

• Yes, as long as the assistance is for the purpose of furthering sustainable development or promoting welfare and is likely to contribute to a reduction in poverty. The contribution does not have to be immediate or direct. During Parliamentary debates on the Act, many MPs and Peers were concerned that the Act would stop us funding a wide range of sectors. In all cases we were able to assure them that this was not the case. Public sector reform is a case in point. Reforming the public sector will often be key to achieving sustainable development or the welfare of the people it serves.

Why doesn’t the Act define key terms like "poverty", "welfare" and "sustainable development"?

• While these terms are generally understood, it is impossible to construct definitions that cover all their aspects. Incomplete definitions would have the unintended effect of limiting the activities the Secretary of State could support.
• The Act refers to sustainable development as "including 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 or countries in relation to which it is provided." This is not a definition as such, but has been included to ensure that a Secretary of State is not bound by definitions that are either too environmental or too economic.

Does the Act affect what countries we can work in? Can we still work in Middle Income Countries?

• Yes we can still work in Middle Income Countries. The Act is ultimately concerned with the poverty of people rather than countries. The Secretary of State can give assistance outside the UK wherever there is poverty. However, if the overall programme were to be heavily skewed to Middle and High Income Countries, the Secretary of State would be at risk of legal challenge for acting in a way inconsistent with the principles of the Act