The end-of-life care charity Sue Ryder recorded a deficit of more than £7m last year as it made “strategic transitions” and sold off three of its services.

The charity’s latest annual report shows the charity recorded a consolidated net deficit of £7.5m in the year to the end of March, compared with a net deficit of £11m in the previous 12 months.

The accounts show Sue Ryder had an income of £116m in 2023/24, up from £112.2m the previous year, with expenditure increasing from £123.1m to £124.2m.

This year’s deficit was reduced mainly because the charity sold three of its four neurological services to the brain injury charity Brainkind, with the transfer of almost 400 staff, volunteers and bank staff. 

The report shows its employee numbers dropped to 2,637 in 2023/24, down from 2,788 in the previous year.

Brainkind took over the neurological services in November 2023 and all roles were protected following the takeover, the report says.

Sue Ryder’s running costs were cut by £7.3m following the sale.

The charity’s reserves fell from £59.8m in 2022/23 to £52.3m last year. 

The accounts show its fundraising income grew by £2.3m year on year to £19.6m and donations increased to £8.9m. Legacies were up by 20 per cent from £6.4m to £7.7m.

Sue Ryder said spreading its focus across end-of-life, neurological and bereavement support was becoming “increasingly challenging”.

A spokesperson for the charity said: “The last financial year saw some strategic transitions for Sue Ryder. We divested three neurological services, which accounts for the reduction in staff compared to 2022/23.

“Despite the financial challenges being experienced across the charity sector, we continued to invest in care services in our hospices and growing our bereavement support. 

“These were crucial to increasing our reach and better meeting the needs of people approaching the end of life and living with grief. Additionally, we made necessary investments in supporting functions such as IT infrastructure and systems.

“The hospice sector faced a collective deficit of around £77m in 2023/24. The cost-of-living crisis, rising inflation and increasing staff costs has been a significant challenge. 

“At Sue Ryder, we are calling on the UK government to work with us to find a sustainable funding model for the sector. 

“Supporting people at the end of their lives is a vital part of the healthcare system. It is time that is recognised and funded appropriately.”

Bereavement service investments saw costs rise from £0.4m to £2.8m and central support costs rose by £4.2m.

Despite removing the costs relating to neurological services, underlying pay costs rose by £3.9m.

“This increase includes annual uplifts in rates of pay required to keep pace with market rates and statutory increases in the National Living Wage, as well as contributions to workplace pensions,” the report says.

Palliative and end-of-life pay costs accounted for the biggest increase in expenditure and were up £1.4m on the previous year at £26.4m.

Retail pay costs were the second highest increase in expenditure, up £1.1m on the prior year to £20.8m.

“The high cost of consumables used in our healthcare services have contributed to increased spend, and food, medical supplies and utilities have increased by approximately 25 per cent on the prior year,” the report says.