Kent County Council

The challenge

Charities play a vital role in delivering public services, much of which is through delivering contracts for local government. However, contracts may not always cover the ‘full’ cost of delivering these services to a high quality and may not cover all associated or unanticipated costs—including any relevant ‘core’ costs, such as staffing costs, rent, or transport. As such, many charities must subsidise these contracts with other income sources to ensure they have full cost recovery (FCR).

In January 2022, Kent County Council commissioned NPC to help them to better understand the issue of FCR in its own voluntary and community sector (VCSE) contracts. KCC found that Covid-19 had revealed existing challenges around commissioning processes, including issues relating to FCR, and relationships between its commissioners and VCSE providers. NPC worked with KCC to research these challenges, focusing on the issue of FCR and how to implement it in VCSE contracts, to inform KCC’s future policy and strategy work in this area.

The approach

Over 11 weeks, we identified key themes and issues and made recommendations relating to KCC’s approach to FCR in its VCSE contracts. We conducted 33 interviews with staff from across KCC teams, larger ‘lead’ VCSE providers, and smaller VCSE providers. Additionally, we spoke to five national experts in commissioning and four staff from comparable local authorities, to give context to our findings. Finally, we conducted financial analyses of three VCSE providers from our pool of interviewees, to illustrate our findings with practical examples. We then analysed this data to see where the views of different groups aligned and diverged.

We presented our overall findings to KCC’s Strategic Partnership Board in March 2022, and its VCSE Steering Group in April 2022. You can read the report in full here.

The result

KCC decided to publish the report in full, so as to convey the full detail of its findings publicly and offer insight to other local authorities that may be keen to explore similar issues. KCC also committed to embedding our final recommendations where possible, to build on existing good practice, improve current ways of working, and explore possible alternatives to the current commissioning model.

At NPC, we’ve built on this work to share what we’ve learnt with the wider public sector.

The work NPC undertook on Full Cost Recovery has been invaluable and as a provider they ensured that we were always kept up to date and had an open dialogue.

They were flexible in their approach and able to adapt as the research developed, which was important when working on a subject where there was little precedent.

As an organisation NPC have real credibility within the voluntary sector and their wider understanding of the sector enabled them to create a robust research report.

Lydia Jackson, Head of Engagement for the Voluntary and Community Sector,

Kent County Council