Collapsed Shropshire Relate charity owed £130,000 to staff

Relate Shropshire, Herefordshire and North Staffordshire, which helped thousands of couples with relationship struggles, went into liquidation with debts of £294,654.

A report prepared for the creditors meeting, which took place on Monday, revealed that employee claims amounted to £128,006.44.

The charity was also found to owe £29,632 in rent arrears, £21,189 to HM Revenue & Customs for PAYE, and £32,326 for the Local Sustainability Fund. It is listed that the charity has around £42,971 in assets.

The report listed £52,707.02 of employee claims as "preferential creditors", a figure which represents arrears of wages up to £800 per employee, plus all outstanding holiday pay.

The larger figure includes all pay in lieu of notice, and all redundancy pay. Relate Shropshire, Herefordshire and North Staffordshire helped around 12,000 couples a year and employed 72 people. In a statement within the creditors report, trustee Sandie Dent said the charity had been hindered by small private counsellors offering cheaper services.

She said: "Over recent years public sector funding cuts, general economic challenges, and an increase in competitors for some of our services impacted on the ease with which we attracted our share of the market.

"The need for counselling services continued to increase but funding cuts left us more reliant on private sector contracts and self-funded service end users.

"The strong unique selling points which differentiate Relate from other providers also made the cost of the service less competitive, and increasingly we were losing market share to small private practice counsellors who offered similar services at a more competitive rate."

Mrs Dent explained that financial issues dated back to the start of 2014.

She said: "By early 2014, the organisation had depleted its reserves, fallen into a deficit position, and cashflow became on ongoing challenge. During 2015, this challenge intensified, and towards the end of the year it became increasingly difficult to pay rents and salaries on time.

"After a change in management in late 2015 a rescue plan was put in place with the aim of reversing this deficit position and bringing the centre back into surplus.

"Despite a major restructure, including redundancies and changes to premises – amounting to a 20 per cent cut in expenditure – cashflow continued to be an issue, ultimately leading to its current situation."

The charity ceased to trade in late October with the loss of 72 jobs.

Following the charity's closure, Chris Sherwood, head of national charity Relate, said that the services are still available for those who need them.