Current Government contracts with the third sector, be they Dept of Health, Education, Home Office etc., rarely pay full cost recovery for the contracted services.  Full costs on justifiable indirect expenditure should be paid, with clear guidlines on how they should be listed, what can and cannot be claimed etc.

Why is this idea important?

Current policy leaves third sector organisations funding indirect costs on Government contracts themselves in many cases, from other sources of income. These other sources are usually voluntary and most donors would not be happy in effect 'topping up' Government investment in services which they are already funding through taxation.

Furthermore, the necessity for third sector organisations to provide this component funding for Government contracts reduces the value of their input into areas in which the Government relies on them to provide non-contracted services, which it is increasingly doing.

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