Full cost recovery in VCSE contracts: Research into the experiences of Kent County Council’s VCSE partners in public service commissioning
The third sector can be a vital partner in delivering a range of public services, from social work, to domestic violence support, to providing community transport services. Using their knowledge, trust amongst local communities, and ability to act nimbly and innovatively, Voluntary, Community and Social Enterprises (VCSEs) can deliver better outcomes for service users and taxpayers. This partnership is usually in the form of contracts commissioned by a local authority to be delivered by a VCSE. However, these contracts often do not cover the full cost of the work. NPC’s State of the Sector research found that most charities pre-pandemic would subsidise their contracts from other income. This is likely to continue, as inflation erodes the value of existing contracts, and with NPC’s research showing a more competitive market as more small and medium-sized charities seek to deliver public contracts.
This work matters because not covering the full cost of contracts brings risks to the people who rely on those services, not just those providing them. Such risks are magnified by the cost of living crisis, as pressures on charity income and on communities mount up.
While this research is specific to Kent County Council there a number of lessons that apply to the wider local government sector, and npc plan to produce a follow up briefing on these wider lessons.
