A Short History of Urban Aid Policy and Programming in the UK BY Christopher Yap, Colin Marx, and Caren Levy, september 2022

The UK’s aid programme grew out of the dismantlement of the British Empire in the twentieth century. Many of the mechanisms used to deliver overseas aid today have been repurposed from colonial-era institutions and practices. This section presents an overview of how the overseas aid paradigm emerged in the UK between the late nineteenth century and the mid-1940s in order to understand the political context in which urban ODA activities would later emerge and to emphasise that the UK’s ODA landscape cannot be untethered from its foundations in historical imperial relations.

The origins of overseas aid in the UK are inextricable from the history of the British Empire. During the nineteenth century, the political vogue for a laissez-faire economics in the UK’s domestic policy extended to its colonial policies; responsibility for economic development rested with colonial governments or private institutions.

This was most clearly affirmed by William Gladstone’s Liberal government of the 1850s and 1860s. As Gladstone himself stated, “Every question in which you cannot show an Imperial interest, shall be left to be dealt with and managed by the Colonies themselves” (HC Deb 23 Jun 1852, quoted in Knaplund, 1923, p. 310).

For much of the nineteenth century, the UK’s primary overseas expenditures were military; from 1870-80, total spending in the colonies amounted to £28.7 million of which £26 million was military (British Sessional Papers, 1881, Vol.64 cited in Wicker, 1958, p. 172).

This policy was challenged in 1895 by Joseph Chamberlain who argued in the House of Commons that Britain should invest in its “undeveloped estates and estates that can never be developed without Imperial assistance” (HC Deb 22 August 1895). Between 1895 and 1914, the UK government administered a small number of guaranteed loans to colonies such as the West Indies.

It is estimated that in 1900, 16.4% of the world’s population lived in urban areas (Ritchie & Roser, 2019). However, this estimate masks important differences between countries and regions. In 1950, the first year for which reliable data is available, Uganda, for example, was just 2.82% urban (Ibid).

In 1913, on the eve of the outbreak of the First World War, the British Empire included 23% of the world’s population. Decisions, then, about whether or not to contribute to the development of its colonies were of global consequence.

In contrast to the later post-WWII discourse, emerging debates at this time on overseas spending were primarily a reflection of the changing relationship between the UK and its colonies – about imperial responsibilities – rather than mechanisms for development and poverty reduction. In 1923, for example, Viscount Milner (1923, p. 155), former Secretary of State for the Colonies (1919–21) advocated for an Imperial Development Fund to extend credit to the colonies, however this initiative was not taken up.

Throughout the 1920s and 1930s, the primary case for overseas aid was that it would ultimately benefit the UK’s economy. The Trade Facilities Act of 1924, for instance, enabled the Colonial Secretary to support loans to colonies through interest subsidies for public utility projects if and only if they promoted employment in Britain.

During the 1920s a series of regional Loan Acts were passed, for example to Palestine and East Africa. These regional agreements were consolidated in the 1929 Colonial Development Fund Act that aimed to stimulate trade with Britain’s colonies in order to boost Britain’s flagging economy. However, the total annual budget was not to exceed a meagre £1 million (approximately 0.02% GDP) and large proportions of the budget often remained unspent. The rhetoric surrounding overseas aid, in the form of guaranteed loans, remained grounded in imperialism and at the 1932 Ottawa Imperial Economic Conference, Britain reaffirmed its policy of imperial preference.

In the first half of the twentieth century the UK also made a number of colonial interventions in urban areas that were more significant in terms of budget and impact than its concessional overseas spending activities. For example, the UK established colonial planning systems and regulations (King, 1976), which reflected European planning logics, were designed to meet the demands of colonial management, establish industrial-era technologies (Omolo-Okalebo, Haas, Werner, & Sengendo, 2010) and promote a liberal social order emphasising, amongst other things, private property ownership (Gruffydd Jones, 2012). Such colonial planning systems significantly shaped, and continue to shape, cities in former colonies.

This period also saw the establishment of a small number of government research institutions such as the Building Research Station (1921) and the Transport Research Laboratory (1933). Over the following decades these centres and others built substantial teams of researchers specialising in overseas urban development.

The 1940 Colonial Development and Welfare Act was the first piece of legislation that outlined a vision for overseas aid that resonates with UK ODA policy today. The Act widened the definition of overseas aid to include any activities that promoted “the development of resources of any colony or the welfare of its people.” Grants were disbursed and loans administered to colonies and the money was spent with relatively little oversight from Britain. The Act also increased the aid budget substantially to £50 million over ten years (approximately 0.07% GDP). The Act proposed, for the first time, changes to the UK’s government institutions to manage overseas development spending. However, many of the institutional changes outlined were put on hold until the War ended.

In 1945 the Colonial Development and Welfare Act was revised, increasing the budget again to £17.5 million per annum. The 1940 and 1945 Acts were also significant because they included substantial, additional research budgets for research in British colonies (£500,000 per annum in 1940, rising to £2.5 million per annum in 1945).

In the UK, the period from 1940-1964 gradually established the foundations of today’s overseas aid paradigm: the notions that aid should be given to countries outside of the UK’s control or influence; that aid should contribute to the welfare of people in the recipient country; and that there was a distinction between the UK’s commercial and aid interests. Urban challenges never featured explicitly in overseas aid policy, and yet urban development, specifically infrastructure development, remained a primary activity for much of the period.

Throughout the late 1940s and into the 1950s, UK’s overseas aid policy wasn’t driven by a coherent ideology, rather it was a series of processes that gradually filled the vacuum left by colonial administration. The fragmented way that expenditure was managed reflected the incremental processes through which overseas aid was emerging, the rapidly changing colonial and post-colonial landscapes, and the distribution across departments of civil servants with expertise in dealing with specific regions or territories.

The end of the Second World War brought about significant changes that continue to shape the UK’s ODA agenda today. The first was the independence of former colonies and the development of the Commonwealth. The second was the creation and consolidation of multilateral agencies such as the United Nations and the World Bank.

The 1950s also saw the rise of structuralist approaches to development; first in Latin America, influenced by the work of economists such as Raul Prebisch and what came to be termed the ‘Dependency School’, and which expanded significantly to Sub-Saharan Africa. Structuralism was characterised by the critique of market-led approaches to development – framed in terms of market inelasticity (Little, 1982, p. 20) – and corresponding support for state intervention (Arndt, 1985). This period, then, saw the rise of the modern, developmentalist state.

The International Bank for Reconstruction and Development (IBRD), the first institution of the World Bank Group, was established at the 1944 Bretton Woods conference. Its mission was to provide loans to assist reconstruction in Europe. However, when the Marshall Plan came in to effect in 1948, the IBRD shifted its focus to non-European countries.

In 1945, the United Nations was formed comprising, initially, 51 nations. The UK became one of five permanent members of the UN Security Council and had its own seat on the World Bank Board affording the UK special influence and power within those organisations to shape agendas (Wickstead, 2020).

The idea of a ‘British Commonwealth of Nations’ was first proposed in 1917 and formally adopted in 1926 to describe the relationship between the UK and former colonies such as Canada, Australia, and New Zealand. However, the Commonwealth, as it was then known, expanded significantly as a result of decolonisation following the Second World War.

The expansion of the Commonwealth brought about significant changes in overseas concessional spending activities. The first was that the UK overseas concessional spending became overwhelmingly targeted towards Commonwealth nations. Secondly, independence brought about changes within the former colonies themselves; a notable trend was the desire for new capital cities, such as Yamoussoukro in Côte d'Ivoire and Abuja in Nigeria (Oviedo, Levy, & Dávila, 2018), and a new engagement with the urban as a tool of the nation state (Mumford, 1968).

Thirdly, the Commonwealth fundamentally transformed Britain’s geopolitical and economic situation; concessional overseas spending became one of many available tools of international relations that replaced colonial hegemony. However, some historians have argued that the aim of concessional overseas spending in this period was to facilitate and continue the extraction of primary resources from former colonies, such as Malayan rubber and West African cocoa, with the overarching goal of strengthening the UK’s economy (Tomlinson, 2003).

Finally, the creation of the Commonwealth brought about significant institutional changes within the UK government. Concessional overseas expenditure was managed across at least four departments, the Foreign Office, the Treasury, the Colonial Office, and Commonwealth Relations Office.

There were also a significant number of UK government agencies involved in overseas urban activities, many of which had a commercial focus, but some of which would later be grouped together with ODA activities. The British Overseas Trade Board and the Construction Exports Advisory Board, for example, provided expertise and technical services on overseas large scale urban and industrial projects, particularly in emerging, oil-producing economies.

The UK’s overseas urban capacity was bolstered inadvertently by the 1947 Town and Country Planning Act, which made it mandatory for all Counties and Boroughs to have a Planning Office and, thus also, professional urban planners. There was therefore less work available for UK planning consultants, some of whom were approached by the Colonial Office in the 1960s to work on urban projects overseas.

At the same time ‘the urban’ was rising as a distinct discourse. The works of the American urban historian and sociologist, Louis Mumford, for example, were increasingly available in the UK. And in 1958 the British urban sociologist, Ruth Glass, established the Centre for Urban Studies at University College London, which continued until 1980, and where she coined the term ‘gentrification’ in reference to the changing dynamics of British cities.

The 1950s saw the first international fora dedicated to urban development. In 1954, for example, the United Nations held the first International Symposium on Housing and Community Planning in Delhi, India. And in 1956 the United Nations Economic and Social Council established the UN Centre for Housing, Building and Planning.

Also in 1954, the Department of Tropical Architecture was set up in the Architectural Association (AA) - the forerunner to the establishment of the Development Planning Unit (DPU) in UCL in 1971 – with the aim to “influence the euro-centric architecture that was being exported to the tropics…” (Wakely, Levy, & Yap, 2014).

In 1957, the British government published a White Paper entitled, ‘The Role of the United Kingdom in Commonwealth Development’, which stated that Britain’s “special responsibility” for its colonies ends when they gain independence. Nevertheless, in 1958, Britain created Commonwealth Assistance Loans specifically for newly independent countries. Pakistan and India received significant loans that were used to fund large scale infrastructure projects within their respective 5-year plans. Crucially however, the loans could only be spent on British goods and services.

By the late 1950s, UK overseas concessional spending was between £50-80 million per annum, averaging 0.4% GDP, although up to 20% of the budget comprised military aid. Between 1957/8 and 1961/2, the UK’s aid spending doubled, however in terms of proportion of GNP it was still below the average for OECD countries (Tomlinson, 2003).

In 1960, the International Development Association was formed as the second major part of what was to become the World Bank Group. In the following decades, The United Nations and the World Bank became the most powerful multilateral actors in international development, although their engagement with the urban has been highly variable.

Also in 1960, the Organisation for European Economic Co-operation (OEEC) (the forerunner of the Organisation for Economic Cooperation for Development – OECD) established the Development Assistant Group (renamed the Development Assistance Committee in 1961), to document and report international aid flows from OECD members to countries deemed eligible to receive aid; known as the DAC-list.

Beginning in the 1960s, the UK government used the research allocation within the aid budget to fund some specifically urban studies. These studies tended to be small in scale and technical in their approach. For example, in 1962 the UK government funded urban traffic studies in Kingston Jamaica, conducted by the Road Research Board within the Department of Scientific and Industrial Research.

Over the course of two White Papers in 1960 and 1963, the UK government set out for the first time a vision for its aid policy that included aid flows to non-Commonwealth nations. The papers represent the first time that UK approached overseas aid as a distinct set of issues.

In 1963, the UK also passed the Commonwealth Development Act that increased the value of exchequer loans available to colonies and former colonies on quasi-commercial terms. This was intended to be an alternative source of development finance to grants.

In 1964 the UK established its first Ministry of Overseas Development. This was a significant step towards the recognition of a development agenda that was distinct from the UK’s other overseas interests and activities. The Ministry took responsibility for many activities that had previously been managed across multiple government departments.

This period saw the continuation of the large-scale overseas infrastructure spending that characterised the relations between donor countries and developmentalist States. Overwhelmingly, ODA was targeted at Commonwealth nations. From the mid-1960s onwards, questions were raised by UK Members of Parliament as to whether ODA was too focused on urban activities.

Beginning in the 1970s, a global urban academic discourse came to prominence. Seminal works by John Turner, David Harvey, Manuel Castells, and Charles Abrams, amongst many others, brought issues of housing, informality, and the specificity of urban challenges to a wide global audience.

In 1964, 35.4% of the world’s population lived in urban areas. But again, this figure hides important variations between regions and countries. In West Africa, for example, Ghana was 25.5% urban, while in East Africa, Tanzania was just 5.87% urban (Ritchie & Roser, 2019). These figures indicate that while the majority of the world’s population still lived in rural areas, there was substantial variation in levels of urbanisation across Britain’s former colonies.

In November 1964, the UK Prime Minister Harold Wilson established the UK’s first Ministry of Overseas Development, led by Barbara Castle. The Ministry took on responsibility for all development aid with the exception of budgetary aid to former colonies which was managed by the Colonial Office. Implicit in Castle’s approach was the idea that the Ministry’s role was to enter into partnerships with aid-recipient governments, not to dispense charity. This ethos was reflected in the White Paper, “The Work of the New Ministry” (1965), which stated:

“The solutions to the problems of developing countries are neither simple nor obvious. They will involve new experiments, new methods, new institutions, new relationships. There are many paths to development. Our aim is to help the developing countries to find and pursue them” (paragraph 9).

The White Paper also raised the possibility of moving towards untied aid – aid that is not conditional on being spent on UK goods and services – but this did not become policy until 1997. Crucially, the Paper did not state how much aid was to be allocated.

The Ministry administered aid flows to multilateral institutions such as the United Nations Development Programme (UNDP), established in 1965, as well as bilateral aid spending, making it unusual within the wider international donor community, for whom these activities were often managed across three or four departments (Wickstead, 2020).

In 1964 the Ministry commissioned the first large-scale urban social survey and plan for the city of Kaduna in northern Nigeria, delivered by Max Locke (published 1967). The work was ground-breaking for then being the UK's largest ever urban development programme and because it was based on an intensive social survey.

In the period 1964-71, the primary mechanism for aid delivery was bilateral aid to commonwealth nations that remained above 86% of the aid budget, which fluctuated between 0.39 – 0.53% Gross National Income (GNI) (Tomlinson, 2003, p. 424).

Over the following decade, the status of the Ministry changed several times. In 1967 it was downgraded, with the Minister losing Cabinet-level status. In 1970, the Ministry became the Overseas Development Administration, a department within the Foreign Office. And in 1974, it again became a separate department, but remained without a Cabinet-level Minister.

Throughout the 1960s, the UK’s primary urban ODA activities were engineering-led projects, such as building ports, airports, and roads; delivered through the dominant project paradigm of aid investment at the time, which saw large scale infrastructure as a driver of economic growth, particularly through building extractive capacity (Leys, 1996).

Although the overseas expenditure at this time was not targeted spatially in terms of urban and rural investment, the UK contributed significantly to urban programmes in recipient, almost exclusively Commonwealth, nations through funding the construction of infrastructure to service their economies.

By 1965, the Ministry’s urban ODA activities had come to the attention of British MPs. In a House of Commons debate on the proposed Overseas Development and Service Bill, Labour and Cooperative Party Member of Parliament for East Ham South, Albert Oram, argued:

“I feel that there has been a tendency to think of technical assistance and aid too much in urban terms and in industrial terms. It is difficult to say these things without appearing to criticise urban and industrial development … [but] we should not lose sight of the desperate need for technical assistance in agriculture” (HC Deb 24 Feb 1965).

In 1969 the DAC defined Official Development Assistance (ODA) for the first time, stipulating distinctions between ODA resource flows and other overseas activities, such as military and commercial spending. From 1969 until 2017, the OECD defined ODA as resource flows to DAC-list countries and/or to multilateral institutions that are:

“Provided by official agencies, including state and local governments, or by their executive agencies; and each transaction of which: is administered with the promotion of the economic development and welfare of developing countries as its main objective; and is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent)” (OECD, 2019)

Since 1969, the way that ODA is measured has since been refined to better capture the diversity of resource flows between nations. And in 2018 the OECD changed its definition of the concessional element of ODA, adding greater specificity and a greater stratification of countries beyond simply ‘developing’ and ‘developed’. Overall however, the ODA paradigm established in 1969 remains today.

Building on the OECD’s definition, also in 1969, the Pearson Commission proposed the target that DAC-members allocate 0.7% Gross National Product for ODA. The Commission report, ‘Partners in Development’, proposed that all DAC-members aimed to achieve this target by 1975 and no later than 1980. The majority of DAC-member states accepted this target, although notably the USA did not.

In the early 1970s, several MPs spoke in Parliament on the need to shift towards rural development and away from urban projects. In 1971, for example, twice Minister for Overseas Development, Reginald Prentice, argued in parliament that, “There should be a considerable shift from urban to rural development” (HC Deb 9 June 1971).

In 1971, the Development Planning Unit (DPU) was established in UCL, when the AA’s Department of Development and Tropical Studies moved to the Faculty of Environmental Studies (Bartlett) and Otto Koenigsberger was appointed Professor of Development Planning. In the same year, Barbara Ward established the International Institute for Environment in Development in London. Both of these institutions would become leaders in ODA urban research.

In 1972, the United Nations held the first Conference on the Human Environment in Stockholm, Sweden

In the early 1990s, urban development rose to international prominence as a development challenge. This was in recognition of rapid rates of urbanisation around the world, and especially in China. Urban development featured prominently in international events such as the United Nations Conference on Environment and Development (1992) and Habitat II (1996).

By the mid 1990s, the UK had built up strong capacity for urban ODA research across both governmental research and Higher Education Institutions. There were also experienced urban practitioners within the Overseas Development Administration's Engineering Division. The opportunity to mobilise these resources came with the change of government.

When the Labour government came to power in 1997 it marked a sea-change in ODA policy and institutions in the UK. With a substantially increased budget and under Clare Short's leadership, the newly created Department for International Development (DFID) became a world leader in urban ODA activities.

In 1990, 55% of India’s urban population lived in ‘slum’ settlements; in Nigeria the rate was 77% (Ritchie & Roser, 2019).

Following a governmental review of UK aid policy in 1990, a number of new issues began to enter the ODA discourse that challenged the explicitly political and commercial objectives of the 1980s. The first was an emphasis on country ownership of development projects. The second was the emergence of health and education ODA projects, as well as projects specifically targeting poor women. This trend was driven, in part, by the rapid rise to prominence and adoption of the Sustainable Livelihoods Approach (Chambers, 1991) in UK ODA programming as well commitments made following the United Nations Decade for the Advancement of Women (1976-85). The third was the loosening of conditionalities away from the Washington Consensus and an increase in debt relief to aid recipient countries.

The early 1990s saw the emergence of global development initiatives such as the International Development Targets and the Commonwealth Development Targets. Whilst these efforts ultimately failed to gain global traction, they precipitated the Millennium Development Goals, which were to define the global ODA agenda for the first fifteen years of the next century.

There was recognition too that by the early 2000s, 50% of the world’s population was going to be living in urban areas. Several multilateral agencies published specifically urban strategies, such as the World Bank’s policy paper, 'Urban Policy and Economic Development: an agenda for the 1990s' (1991), and United Nations Development Programme (UNDP) strategy paper, 'Cities, People, and Poverty: Urban Development Co-operation in the 1990s' (1991).

Urban development also featured prominently in the United Nations Conference on Environment and Development held in Rio, which resulted in the non-binding action plan, ‘Agenda 21’ (1992), as well as in the United Nations International Conference on Population and Development held in Cairo (1994).

In the early- to mid-1990s a small team began to form within the Engineering Division of the Overseas Development Administration with an interest and expertise in urban development. This team developed close ties with an experienced cadre of urban researchers across the UK and supported a number of urban research projects, often funded through its Engineering Knowledge and Research (EngKAR) programme, which began in the 1980s and invested over £100 million in research between 1990-2005.

In 1995, the Engineering Division awarded a Framework Contract for Urban Management to a consortium comprising the Water Engineering and Development Centre (WEDC) at Loughborough University; the Institute of Government Studies at the University of Birmingham, the Development Planning Unit, University College London, and Levitt Bernstein architectural practice. In collaboration with the Division, members of the consortium conducted a wide range of urban ODA research.

There was also a significant body of ODA-funded research on urban transport, conducted primarily by the Overseas Unit in the Transport Research Laboratory. Research projects funded during this period often resulted in a single published report such as: ‘The performance and impact of rail mass transit in developing countries’ (1990); ‘The performance of busway transit in developing cities’ (1991); and ‘Informal public transport and the woman trader in Accra, Ghana’ (1995). These types of projects often combined both quantitative analyses based on transport usage with quantitative analyses of attitudes and behaviours regarding urban transport.

There were also a smaller number of research projects funded as part of ODA’s Natural Resources Systems Programme – conducted often by the Natural Resources Institute along with a small number of Higher Education Institutions. A notable trend in these projects was the emergence of the idea of the ‘peri-urban’, which corresponded with its emergence in UK ODA policy discourse. Research projects in this area included: ‘The design and development of a prototype Peri-Urban Demonstrator for Spatial Data Integration (1996); A review of energy utilisation in peri-urban production systems (1996); and Kumasi peri-urban horticultural data (1997).

Perhaps the most significant international urban-focused event during this period was the second Habitat International conference, Habitat II, held twenty years after the first conference in 1996 in Istanbul. The UK sent a substantial delegation to participate in the conference that, relative to Habitat I, saw the significantly increased presence of urban civil society organisations from around the world. The conference resulted in the Habitat Declaration, signed by all attending parties. However, while Habitat I aimed to build a collective urban narrative, Habitat II shifted towards logics of urban management through targets and sectors (Cociña, Frediani, Acuto, & Levy, 2019, p. 136).

When the Labour Party won a landslide election victory in May 1997, they immediately enacted the biggest changes to the UK’s ODA institutions, policies, and programming since 1964. The Overseas Development Administration within the Foreign and Commonwealth Office was replaced by the Department for International Development (DFID), led by a Cabinet-level Minister, Secretary of State for International Development, Clare Short (1997-2003).

The UK’s aid ambition soared and substantially larger budgets were allocated to the department. The Labour government, in accordance with their commitment to an “ethical foreign policy” gave the space and support for DFID to flourish on its own terms; the Department broadened its remit beyond the administration of overseas aid to include international affairs affecting developing countries (Ireton, 2013, p. 50). Short’s dynamic and receptive leadership brought about a significant change in the culture of the Department, particularly for civil servants, who were encouraged to put forward new agendas.

The 1997 DFID White Paper, “Eliminating World Poverty: A Challenge for the 21st Century”, explicitly recognised the developmental challenges posed by urbanisation:

“By the beginning of the next century, more than half of the world’s population will for the first time in history be living in towns and cities. For most poor people, urban environment problems – such as air pollution, poor sanitation and contaminated water – will be a major concern. In many cases, the infrastructure to tackle these problems either does not exist or ignores their needs. We will promote urban development policies and programmes that focus on improving employment, shelter, education, health, water, sanitation and energy provisions for poor people” (DFID, 1997, pp. 51-52).

Within the first month of the new government, Clare Short informed Parliament:

“I intend to concentrate our aid programme on improving the access of the poor to essential health services and basic education, and on finding ways to increase the incomes of smallholder farmers and the urban poor” (HC Deb 21 May 1997).

The creation of DFID brought about fundamental changes in the UK’s approach to ODA. The first was the official end of tied aid. This change was significant insofar as it meant that there was now a clear separation of the UK’s commercial/diplomatic and developmental interests. The rhetoric regarding aid became less about charity and more about partnerships between the UK and aid recipient countries.

Second was a more subtle shift in the way that aid was allocated. Clare Short moved away from short-term, individual projects, towards longer-term and multi-dimensional development programmes and direct budgetary support in accordance with changing trends across the DAC community.

In 1997, DFID’s Engineering Division was renamed the Infrastructure and Urban Development Department (IUDD). Within its first year, DFID took over representation of the UK to the United Nations Centre for Human Settlements (UNCHS) from the Department of Environment, Housing and Local Government; Michael Mutter of IUDD was appointed its representative.

There was an expansion of urban-focused civil servants and a conscious effort to build DFID’s capacity for urban programmes. In addition to IUDD’s central budget of approximately £7 million, urban programmes emerged through consultation between DFID’s Advisory Groups and country programmes, which were funded bilaterally.

This period also saw IUDD-DFID contribute to number of significant international documents on urban development challenges, which proposed specifically urban development targets, including, “Focus on the Habitat Agenda: The Commonwealth Development Framework for Human Settlements” published by the Commonwealth Consultative Group on Human Settlements (CHEC & IIED, 1999), and “Shaping the Urban Environment in the 21st Century: From Understanding to Action” (OECD, 2000).

In 1999, along with the World Bank and UNCHS, DFID was one of the founding partners of the Cities Alliance, a global partnership that promotes inclusive and sustainable urban development through slum upgrading programmes and developing city development strategies.

In the late 1990s, IUDD seconded staff to both the United Nations Centre for Human Settlements and the European Union to help build urban capacity in those institutions, which evidences the degree of expertise and the regard in which the UK’s urban ODA capacity was held.

In the period between 1997-2003, a number of significant urban ODA initiatives emerged. The first was the Public-Private Infrastructure Advisory Facility (PPIAF), which was jointly founded by the UK and Japanese governments in 1999. PPIAF acted as a catalyst for increasing private sector participation in emerging markets. It aimed to create an enabling environment in cities in aid-recipient countries by building capacity within governmental institutions and departments that would be involved in ODA (and other capital) investment in infrastructure.

PPIAF complemented the other major urban ODA innovation during this period, the Private Infrastructure Development Group (PIDG). PIDG, a multi-donor organisation was established in 2002 by DFID with Dutch, Swiss, and Swedish development agencies, and the World Bank. John Hodges, the former head of IUDD, was appointed Programme Manager. Today the PIDG Trust has a £3 billion investment portfolio, managed by a private company, PIDG Ltd (est. 2018).

There were a number of large urban projects funded by DFID during this period such as the Community-Led Infrastructure Finance Facility (CLIFF), which received initial funding of £10 million.

These innovations, and others, signified a changing economic imperative regarding the role of aid in international development. The idea that aid should not only be charity had been raised decades earlier. But the late-1990s saw the adoption of a new approach to aid distribution: away from unilateral projects and towards the idea that aid should be used as a catalytic fund that could bridge funding gaps and enable market mechanisms and private finance to contribute to development objectives. This trend continues today.

DFID’s Central Research Department (now named the Research and Evidence Division) also funded a large number of urban research projects relating to water and sanitation in informal settlements, the peri-urban interface, and urban livelihoods. What was notable during this period was that ODA research was increasingly conducted in collaboration with international NGOs such as Homeless International (now, Reall) and Intermediate Technology Development Group (ITDG, now Practical Action).

In 2000, world leaders signed the United Nations Millennium Declaration which set out sixty global development objectives. Following this Declaration, at the Millennium Summit, eight Millennium Development Goals were adopted by all of the 191 United Nations Member States. The Goals galvanised international action towards reducing poverty, there was only limited recognition of urban development issues such as the challenge of urban poverty (Satterthwaite, 2003).

In the early-2000s, in accordance with the domestic policies of the Labour government and the newly signed Millennium Development Goals, health and education remained priority spending areas. But agriculture, one of the primary areas of ODA spending in the 1970s and 1980s, largely disappeared from the ODA agenda.

In 2001, DFID published its first and only urban policy paper, ‘Meeting the Challenge of Poverty in Urban Areas’. The paper was produced by a large team of urban experts across the UK. It outlined a clear strategy for addressing the specific challenge of inequality and poverty reduction in urban areas. The paper was incorporated into a broader DFID strategy document that was agreed by Parliament.

Also in 2001, John Hodges, Head of DFID’s IUDD, addressed a Special Session of the United Nations General Assembly, held five years after Habitat II, after which, the United Nations Centre for Human Settlements was elevated to a full UN programme: UN-Habitat.

The early 2000s marked a shift in the UK’s approach to ODA management and delivery. Governance and effective states became primary the Department's primary preoccupations. The focus on governance emerged within both the World Bank and the European Development Fund and was rapidly adopted by donors and ODA agencies around the world. The case for a governance-focus was made most clearly in the DFID policy paper, ‘Making government work for poor people: building state capability’, which states:

“Building the institutions of an effective, democratic, modern state is the most important condition for sustainable development. This is increasingly the major focus of our development work” (DFID, 2001, p. 7).

In practice this meant a swell of governance and institutional advisors across the Department, many of whom specialised in public financial management and other disciplines that previously had not existed within the UK’s ODA institutions. These new advisors often engaged directly with central Ministries in DAC-list countries, such as the Ministries of Finance and Justice, rather than providing technical development assistance for specific projects, programmes, or sectors. Accordingly, bilateral aid became much less sector specific. This reflected the approach championed by DFID’s Permanent Secretary, Suma Chakrabarti, who argued in Oral Evidence to the International Development Committee for an emphasis on professional knowledge, such as auditing, over technical expertise (House of Commons International Development Committee, 22 June 2004).

From 2002 onwards there was also increased engagement with markets and market mechanisms, exemplified by the approach, Making Markets Work for the Poor (M4P). The aim of M4P was to connect poor people to modern markets, including land, financial, and commodity markets.

The culture of ODA programming in the UK was also significantly impacted by the 9/11 terrorist attacks in New York in 2001, which led to an increased preoccupation with the relationship between aid and security over the following decades (Howell & Lind, 2009; Miles, 2012).