Leonard Cheshire £18m per year in red

Back in March, Leonard Cheshire’s Chief Executive Ruth Owen sent round the following letter.

Dear Colleague,

If you were able to join me on the call yesterday, you will already know the situation we face. I’m following up in writing as I shared a lot of information on that call which I know can be hard to digest. If you were unable to join the call, I apologise that this is your first chance to hear this information. Yesterday’s meeting was recorded and is available to watch on the intranet.

Leonard Cheshire is facing a significant financial challenge across the whole of our operation, both in the charitable and service aspects of our work, and we need to act now to reduce our costs across the whole organisation.

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In doing so, we need to protect the jobs in our frontline residential and supported living services but I’m afraid to say that this will lead to redundancies for some of you who work outside our frontline services.

It saddens me that we are in this situation, it’s not what any of us want, it’s certainly not what I understood to be the situation when I took on my dream job. The important thing is that we face it, deal with it and sort it out, and I am committed to doing exactly that.

I want to explain the current situation fully so we all have the same information at the same time, as transparency is important to me, and I want to set out clearly the steps we must take now to address the challenge together. I am sorry I haven’t been able to do it before now, and I recognise that many of you have been anticipating something happening for a while, which is an uncomfortable place to be.

I will be putting a follow-up meeting into our diaries, which I hope everyone can make, as I feel it’s important that we get together again once everyone has had the chance to absorb this news.

Current situation

The financial challenge we face today has been building up over several years. The issue is that we do not have sufficient level of reserves and are operating within an overdraft facility because of reserves being reduced over time due to expenditure exceeding income.  The sale of property and legacies provided a short-term benefit to the bank balance but did not address the underlying and continuing trend of costs exceeding income.  In recent years Leonard Cheshire has undergone significant expansion of programmes many of which have not been fully funded through full cost recovery and has also made significant investments in IT and improvement of the estate.

It’s only recently that the challenging position on cash has been highlighted through improved financial reporting and is being addressed by the executive team and board with a full understanding of what we must do. We have been exploring all options to address the underlying issues and will continue to do so.

So, in summary, for an extended period we have been spending more cash than we have been receiving overall, and that’s depleted the cash we have in the bank to such an extent that’s it’s just not sustainable anymore – we are running out of cash and we need to make savings of circa £18m in the next 12 months.

I know Leonard Cheshire has been through many changes over the years and many of you have been impacted by the changes. This time however we must sort out this fundamental underlying issue and I’m determined for us to fully address it and then move on with our new strategy.

There are many reasons for the financial challenge such as:

  • rapid expansion of activities without the income to fully fund the activities and the connected staffing structures
  • big investment decisions
  • historically fees not keeping track with rising costs
  • continuing increases in wage costs and large energy price rises
  • the sudden and substantial cuts in sources of UK Government funding for our international work
  • and, more recently, two years of the pandemic hitting our fundraised income and increasing costs such as PPE supplies in England.

What this all means is that we must reduce costs now. We will then be able to move positively forward and grow the impact of the organisation in a way that’s sustainable. But first, we must sort out the here and now. We are engaging with our bank, our regulators CQC (Care Quality Commission) and our auditors PwC. The turnaround plan has been approved by our Trustees, giving the Exec Team the go-ahead to deliver the plan to turn Leonard Cheshire around.

Our residential and supported living services across England, Wales, Scotland and Ireland continue to be in demand by commissioning and local authority organisations. Referrals and occupancy levels are resilient. Whilst it has been an incredibly challenging period of time throughout the pandemic, our management and staff teams continue to go above and beyond, and we are now seeing improved levels of staffing to meet our obligations to our service users. Quality standards remain an absolute priority and we are committed to ensuring the highest standards of care throughout. We need to keep reviewing our financial efficiencies, but we will be protecting jobs in this area of our work from the changes we have to make now.

I recognise things are unsettling and I really appreciate your support, as we get Leonard Cheshire back on an even keel. Several cost control measures have already been implemented across the organisation and are already making a difference in reducing expenditure, for example restricting usage of credit cards and tightening approval of purchase orders, while others are still being worked on. Although these all help, they won’t deliver the scale of savings we need to find.

There are effectively three phases we are going through:

Phase one: understanding the situation and how it happened, putting in place disciplines to stop it continuing to happen going forward.

Phase two: Cost reduction, including reducing our staff numbers, and continuing to maximise income from the Annual % Fee uplift from Local Authorities and generating funds through selling surplus properties.

Phase three: looking to the future and the new strategy.

We have been in Phase one and still are and Phase two is starting now and will run concurrently. Being realistic, we probably won’t get to Phase three for another 9-12 months, and the next few months will be difficult.

Phase two next steps

We are looking at selling some of our investment properties to release funds, these are not frontline services. But that won’t get us far enough and is a one-off cash injection, whereas we need to reduce our ongoing monthly costs.

Our single largest cost across Leonard Cheshire is the payroll and so we must reduce our staff numbers in order to create a more financially sustainable organisation. Due to the extent of the financial challenge, I am sorry to say that we cannot avoid taking this very difficult step.

Where possible, we are determined to reduce the number of compulsory redundancies, so, in the first instance, we will offer voluntary redundancy to all staff who are not working within our residential and supported living services. The process, terms and timeline for the voluntary redundancy are included at the foot of this email.

What happens after voluntary redundancy?

When we have confirmed the number of people leaving under voluntary redundancy, and taken into account other financial measures, we will review our financial position and come back to you with next steps. We cannot be definite today, but we want to be absolutely transparent with you that we may need to make further changes at that time through a compulsory redundancy programme.

The terms set out in this email apply only to this voluntary redundancy programme. We cannot at this time enter into any discussion about these potential future steps, nor can we comment at all about the terms of any future redundancy programmes including guarantees on the terms of future redundancy payments as we are not at that stage yet.

I know this email will be disconcerting and I wish we weren’t in this situation. We will do everything we can to minimise job losses at all times. I consider these as a last resort and am always mindful of the impact it has on people.

The important thing is we sort out our current financial situation, as it can’t continue. We owe it to the people we are here to serve today and tomorrow, as well as to all of you.  Whilst doing it, it’s important we remain connected as one team and support each other. Whilst we go through this difficult period, I ask that we all try to keep focused on delivering our priorities and commitments to the best of our ability. Leonard Cheshire is a great organisation delivering vital work that makes a massive difference to people with disabilities, and it’s important that we keep focused on that.

It’s going to be a difficult few months, I wish I could say it won’t be. I’m confident by doing this we will strengthen this wonderful organisation and build the foundations for sustainable growth and increased support. It’ll enable us to then deliver a heightened level of impact in the future through a reshaped and revitalised Leonard Cheshire. Transformation is right at the heart of the new strategy being developed, which will engage disabled people, other external stakeholders, and our staff in its shaping. In parallel to the turnaround plan, we are continuing strategic discussions with potential partners and funders around many of our flagship programmes, which have great potential to advance the opportunities for many disabled people.

On a final note, I want to say that I really appreciate everything everyone is doing. I know we are all passionate about what we do because of the change we make to people’s lives. There are things we need to sort out and these decisions won’t be easy, but once we’re through this period we can focus on taking Leonard Cheshire forward and growing our impact together.

Very best,




  • They are £18m per year in the red, and operating on an overdraft;
  • Due to a number of factors, some mis-management.
  • Selling off the family silver (I.e. Buildings etc.) only temporarily shored things up.
  • They need to make massive redundancies, both voluntary and compulsory.
  • They won’t be making any such redundancies of people working in care homes and supported living.

She emailed staff again on 4th April.

Dear colleague,

I’m mindful that it’s time to keep you up to date with developments on the turnaround plan, following the closure of the voluntary redundancy (VR) window.

With the nature of the programme being voluntary, there wasn’t an expectation for a certain number of people to come forward. During the fortnight, around 170 people stepped forward for VR, of which around 140 applications were accepted.

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These came from across the organisation, from every directorate and at every level. Last Thursday we started to say goodbye to colleagues, a poignant moment. Others are leaving over the next couple of months to aid a smooth handover and managed transition. As I said in my blog last week, some roles we were unable to lose, and it was a bittersweet process to go through – losing brilliant colleagues although knowing that these processes will get us to the place we need to get to – a financially sustainable Leonard Cheshire.

Due to the large number of applicants that came forward for VR, we are regrouping to work through what the next steps will be. We not only need to reduce our monthly ongoing monthly expenditure, but we need to make sure the organisation can function, and although it may be frustrating to wait for more information, we simply aren’t in a place to announce the next steps yet. I can say that I don’t expect to be making any announcements before Easter. I hope that means you can take some time out to relax and recharge.

To give you some insight, we have some areas that will lose a high proportion of people, and new ways of working need to be defined as a result. Other areas didn’t have as many people come forward and we need to work through what it means for them too. Not only that, we have a very complex organisation with a huge number of interdependencies adding extra layers of considerations to be taken into account.  We need to sort these things out with urgency but do it thoughtfully. It’s inevitable we will get some things wrong but I’m hoping we can avoid it as much as possible.

Financial update

In the last announcement, we let you know that we need to take £18m of annual expenditure out of Leonard Cheshire in the next 12 months. I wanted to update you on this because it’s only fair to keep you in the loop.

We have been working tirelessly, looking at every contract we hold, which is a huge piece of work. So many of you across the organisation have come forward and told us of unfavourable terms – paying £35 for an air freshener you can buy for £5 elsewhere, tradesmen travelling from Birmingham to Devon to do basic building maintenance, and other complete inefficiencies. We can’t continue to simply absorb these costs and are looking at ways to improve internal processes where relevant. We also must maintain our quality standards and not affect the delivery of our frontline services. We are constantly looking at ways we can be more efficient. Thank you to everyone who emailed the turnaround team with your money saving suggestions, we are looking into all of them. Do get back in touch if you have more.

At the beginning of the year, we identified a number of surplus properties to go to auction over the next month or two. Two have now been sold and there’s work ongoing to sell others although the timescales for these are not currently agreed.

There has been a lot of talk about the offices we hold at South Lambeth Road in London and Waterloo Court in Wolverhampton and whether it’s viable to keep these running. There hasn’t yet been a decision made on whether we’ll continue with the leasehold arrangements, although it’s looking increasingly likely that keeping the current office spaces in the longer term isn’t going to be cost effective.

It’s very hard to put an accurate figure on the savings we’ve identified so far because of the many variables, but it’s looking like we are already on track to save around £9m of annual operating costs.

Coming back to the turnaround programme as a whole, I continue to work closely with the bank and our governing bodies and they’re supportive of our plan. I want to reassure you that we are making good headway and going in the right direction, although sadly there will need to be some further adjustments to staff levels in some areas. I sincerely hoped this wouldn’t be the case.  We don’t currently have all the answers but are working to get there. I know there is a feeling of ‘treading water’ and uncertainty, I can only apologise for that. All I can say is that things are progressing, and we are working hard to make the picture clearer for you and will come back to you as soon as possible.

In everything we are doing, the changes we are having to make, I always keep in mind the people we are here to serve – everyone whose lives we are transforming and the difference we want to make for them in the future. It’s hard to reconcile having to make the cost savings we must, with our size of ambition and the gap in society that organisations like ours need to fill.  We are maintaining the highest level of quality in our services and will continue to do so. And I am clear that if we have no choice but to exit programmes, we will do it as responsibly as we can.

With kind regards,




  • They think they’ve cut their original £18m loss per year in half.
  • This is by 140 voluntary redundancies across the organisation, except for in residential care and supported living. (They refused 30 voluntary redundancy requests.)
  • Some of these staff have already gone.
  • The organisation will have to reconfigure given the staff losses.
  • One or both of their offices in London and Wolverhampton will likely have to go.
  • They are having a think what to do now.

I have to say I think this is positive.

I think it is extraordinary that an organisation can cut 140+ staff without cutting those actually involved in service provision at the coal face. This is part of the problem to me: too many middle and side management and staff whose roles are nebulous at best, and whose benefit to Actual Residents even less. 

I’m sorry for any of those staff that are going that are decent. I’m not sorry for others; just sorry that more of the unaccountable, patriarchal and Teflon management hierarchy appear to not have gone. Yet.  (You know who you are…)

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