Britain’s biggest relationship counselling charity is on the verge of insolvency after failing to overcome financial difficulties caused by a collapse in funding from NHS, school and local authority contracts.
Relate has been put into administration, with staff told that it has four to six weeks to find a buyer or merger partner if it is to stay afloat. The 26 local branches of the charity, which are each independent, are not affected.
There are fears hundreds of clients could have sessions cancelled after 80 staff – a third of the workforce at Relate’s central arm – including 40 counsellors were made redundant with immediate effect.
The crisis facing the central charity comes amid growing concern about the future of many charities that are struggling to balance the books in the face of rising costs and demand, and declining donations and contract income.
Staff have told the Guardian they were shocked at the sudden announcement of the redundancies last week, with some staff learning they had lost their jobs on a Microsoft Teams call with management arranged by administrators last Friday.
“There are lots of concerns over what will happen to clients as many counsellors were made redundant with immediate effect,” one former staff member told the Guardian. “There was general confusion and lack of organisation with some [staff] on leave and only finding out later in the day they’d been made redundant.”
None of the staff will receive redundancy pay from the charity under the terms of the administration. Longer-serving staff who have lost their jobs have been advised to apply to a government redundancy scheme for compensation. Staff were told further rounds of job losses have not been ruled out as a rescue deal is sought.
Relate offers a range of services, including couples and relationships counselling, family counselling, mediation, children therapy and sex therapy. About a third of its counselling was funded by public sector contracts, with the remainder from means-tested fees, typically between £83 and £130 per session for face-to-face adult relationship counselling.
A statement from Relate said: “The financial climate and the loss of government contracts has impacted Relate Ltd’s ability to sustain that service. They are currently exploring various restructuring options that might be available to the charity in consultation with the local network of centres.”
In a statement, the administrators for Relate said: “Relate’s central support organisation has fallen into financial difficulty following the loss of government contracts. It will continue to trade while options for restructuring are considered.
“Relate operates on a federation basis and the activities of the 26 independent centres that make up the Relate Federation are not affected. They continue to deliver their relationship counselling and other services as normal.
“It has unfortunately been necessary to make approximately 80 employees redundant. This is just under a third of the overall workforce and around 200 employees remain in post. Those affected are being supported with applications to the Redundancy Payments Service.”
Phil Reynolds, of the administrators FRP Advisory, said: “We’re exploring a number of options for the central support organisation and are in communication with both employees and clients about what the ongoing process means for them.”
Relate was set up in 1938 as the Marriage Guidance Council. It became Relate in 1988 and a year later Diana, Princess of Wales became its patron, massively increasing its public profile. Its current president is the celebrity psychological therapist Anjula Mutanda, and past presidents include the actor and comedian Ruby Wax.
Relate’s finances have been under pressure for the last few years, with austerity-era cuts in public funding triggering a series of restructurings and brand refreshes, including in 2017 when a third of its federated centres were merged into the central charity.
Its last published accounts, for the year 2022-23 showed a £690,000 loss on income from its services of £6.7m, while Charity Commission filings show its income from public sector contracts fell from £1.9m in 2019 to £338,000 in 2022-23. Levels of financial reserves had fallen to below three months’ operating costs.
