Background to the report

In June 2020, government announced the merger of the Foreign & Commonwealth Office (FCO) and the Department for International Development (DFID) to form the Foreign, Commonwealth & Development Office (FCDO). The aim of the merger was to unite development and diplomacy in one new department and enable the Foreign Secretary to make decisions on aid spending in line with the UK’s priorities overseas. The new department was created in September 2020.

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FCDO developed a Transformation Portfolio to merge the two departments, consisting of 12 programmes, which it aimed to complete by October 2022. In May 2022, FCDO reduced the scope of the original Transformation Portfolio to create the Integration Portfolio, which consisted of seven programmes. FCDO has completed these programmes but is continuing work to embed the merger and address outstanding system and HR issues such as aligning allowances.

Scope of the report

Our 2010 report on reorganising central government examined the reasons for reorganisations, the costs and benefits resulting from them, and how they are managed. We set out key principles that should be applied when re-organising central government such as ensuring broad support for the change; communicating well with staff and stakeholders; quickly establishing solid reporting systems; being clear about the outcomes sought; breaking down old ‘silos’; and ensuring that normal business is maintained during the transition.

Considering these principles, this report examines whether FCDO has managed the merger effectively and in a way that will maximise its benefits. It analyses whether:

  • the objectives of the merger were clear and supported by an appropriate portfolio of work
  • programmes to merge the departments have been implemented effectively so far
  • FCDO is on track to maximise the long-term benefits that were envisaged

The report does not examine the decision for the merger, but focuses on how the merger has been implemented, with a view to identifying lessons for FCDO going forward and for other government departments faced with machinery of government changes.

Video summary

Report director, Leena Mathew, provides an update on the FCDO merger.


The decision to merge FCO and DFID in 2020 was predicated on the view that combining diplomacy and development would improve outcomes and safeguard British interests and values overseas. While efficiency savings were not the primary goal, the Cabinet Office and FCDO anticipated some savings through merging corporate functions, integrating IT systems and streamlining office accommodation.

A series of international crises, together with the implementation of large cuts in aid spending and changing ministerial priorities, have placed significant demands on the organisation, and FCDO has made sensible decisions to prioritise its efforts. It has made substantial progress with integrating structures and aligning HR and finance policies, helping to remove the practical barriers to people being able to work together effectively.

However, more than three years on, there is still work to do to resolve remaining issues and ensure these basics are delivered. It will also take time for wider cultural change and new ways of working to settle and become fully embedded.

FCDO did not clearly articulate or measure the range of anticipated benefits of the merger, and its approach to tracking the costs of the merger was incomplete and changed over time. The estimated direct costs of the merger are small compared to the overall expenditure of the department, but the indirect costs in terms of disruption, diverted effort and the impact on staff morale should not be under-estimated. These factors should be considered against the potential benefits ahead of any major change.

There is also more the centre of government could do to learn lessons from departments’ experiences and to better support departments going through major organisational change. With unclear objectives, and the absence of mechanisms to track full costs and identify benefits, there is insufficient evidence to conclude on the value for money of this merger.

Our assessment has also necessarily focused more on internal activity to deliver the merger, and it may be too early to fully assess the impact on organisational effectiveness and outcomes. However, we have seen evidence of where a more integrated approach has improved the organisation’s ability to respond to international crises and events, which has led to a better result. FCDO must now move to a phase of consolidation and develop a clear view of the organisation it wants to be, to ensure that it can achieve the long-term benefits of a fully integrated organisation.


Publication details

Press release

View press release (25 Mar 2024)

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