History, Signal, Politics and Strategy: Why Labour Created DFID in 1997

When Boris Johnson announced the creation of the Foreign, Commonwealth and Development Office in June 2020, he signaled the dissolution of the Department for International Development (DFID) after nearly 25 years. Over that time, DFID had won a stellar international reputation, recruited a large and well-respected body of expertise, and made a material contribution to important changes in the global development architecture. In a new series, to be published over the next 18 months, we will look at the ways in which DFID enabled the UK to pursue its development objectives, and the department’s contribution to global development over the years of its existence.

That process starts with a look at the events leading up to DFID’s creation. In contrast to its rushed and apparently ill-considered end, DFID’s genesis was the product of a great deal of thought; policy and political considerations played a substantial role. Indeed, though the popular narrative is that Labour always creates an independent development function, and only the Tories dissolve it (though, notably, they kept DFID in the years of the Cameron and May governments from 2010-19), we argue that the creation of DFID in the form it took was both important and distinct from what the previous history alone can account for. It was also driven by the broader signal that Labour were trying to send, the political circumstances and personalities of the day, and the strategic and policy objectives key players wanted to pursue.

When Short left the government in 2003, Blair wrote to her that the record on aid and development was one of the government’s proudest achievements, and that DFID deserved its reputation as one of the best such departments anywhere in the world.

The History

None of this is to say that the history didn’t matter. It did. Labour did usually create or maintain an independent development function when in government, and the Conservative party before 2010 did not. Nevertheless, this simple binary masks a great deal of important variation. Not all independent departments are equal: a department whose Minister is a full Cabinet member is able to advocate directly for its policy priorities, with disagreements adjudicated over by the Prime Minister. For a department whose principal resource—aid—was attractive to other arms of government, and whose long-term objectives could be subverted in pursuit of other, transactional and short-term objectives, such representation is particularly important. 

The historical precedents are insufficient to explain the decision to create an independent department with a Minister who would be a full member of the Cabinet. To explain the creation of DFID specifically, rather than an independent body of a different form, we must turn elsewhere.

The Signal

In the run-up to 1997, it was clear that the Conservative party was on the ropes. It trailed in the polls and was beset by scandal and a lingering association with high-profile policy failures (above all the forced exit from the European exchange rate mechanism in 1992). The Labour party wanted to draw a clear line between their own approach and that of the Tories. They wanted to disassociate themselves from “Tory sleaze”, such as the abuses in the provision of arms to Iraq exposed by the high-profile Scott Inquiry, and personal scandals like the one in which former Conservative Minister Neil Hamilton was found guilty of asking questions in Parliament in exchange for cash in brown envelopes. The Conservatives were also tarred with flagrant misuse of the aid budget. The Foreign Secretary, Douglas Hurd, had been found to have acted unlawfully in using aid money to pay for a hydroelectric dam in Malaysia (the Pergau dam) as a sweetener for an arms deal.

Labour were relentless, in particular in Parliament, in attacking impropriety; they promised to govern in a different style, and proposing an independent department to ensure aid resources were allocated purely on developmental grounds (as they did in both the 1992 and 1997 manifestos) was intended to reflect that. 

The Politics

Nevertheless, the commitment to create an independent department could easily have been a return to a relatively weak and defensive junior department without Cabinet representation. That this is not what happened owes a great deal to circumstance. In 1996, Joan Lestor, Labour’s shadow development Minister, announced she would not be standing at the forthcoming election. (It later became clear that she was terminally ill). That left a vacancy, and Tony Blair asked Clare Short to fill it. Short was popular both among MPs and the party membership, and as a stalwart of the left wing of the party, was part of an important constituency that Blair was keen to keep onside. All that meant she would be in the Cabinet if Labour won. 

The Strategy

The most important factor, though, was that Short had developed a clear view of what she wanted to achieve on global development.  Blair asked her in late 1996 to consider whether Labour should create a separate department, as a foreign policy review conducted by foreign affairs chief Robin Cook had recommended earlier that year. 

Short wanted to make the eradication of global poverty her overarching goal in office. She had read a report produced in 1996 by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD) which proposed setting a small number of concrete targets, originating in a series of UN conferences earlier in the decade, and to be achieved in the first fifteen years of the new Millennium, for reducing poverty and associated ills. 

In response to Blair’s question, Short surveyed the arrangements in other countries and consulted experts. Crucially, they included John Vereker, then Permanent Secretary at the Overseas Development Administration, the junior wing of the Foreign Office which managed the British aid programme. Vereker had also been a principal contributor to the OECD report. 

In discussion, Short and Vereker established three points. First, if the goal was eradicating poverty, all the available UK aid resources had to be focused on that, which required that they be fully controlled by the Development Minister and not, as was currently the case, susceptible to diversion for other purposes. Second, the UK could not on its own, move the dial enough on global poverty: it would therefore need to build alliances with others. Third, aid alone was not enough: all the UK’s policies affecting developing countries would need to be considered.

Short concluded that only as a Cabinet minister with her own department would she be able to exercise enough influence both at home and internationally in all three of these dimensions to pursue her vision effectively. She wrote back to Blair accordingly. In April 1997, Labour published its election manifesto including a commitment to establish what turned out to be DFID; and the department was duly created over the weekend of 2-3 May, immediately after the election.

Postscript

Blair and Short did not always get on. But when Short left the government in 2003, he wrote to her that the record on aid and development was one of the government’s proudest achievements, and that DFID deserved its reputation as one of the best such departments anywhere in the world. Few, even among those most enthusiastic about the proposition, would have forecast that in 1997. Our next paper will explain how and why Blair came to hold that view. And future work will assess how the foundations built by 2003 were developed and exploited by successive governments over the following 15 years. 

Boris Johnson’s decision to merge DFID with the Foreign and Commonwealth Office—dissolving a department with a stellar international reputation—was loudly criticized from all sides. It is now generally accepted to have failed, and politicians across parties have been actively considering how to rectify matters. DFID’s experience from 1997 to 2020 is highly germane.