Staff costs at Barnardo’s rose by more than £20m as the charity increased its pay to account for the cost-of-living crisis, latest accounts show.
The children’s charity spent £190.5m on staff costs, its most significant area of expenditure, up from £169.4m the year before.
According to the accounts, for the financial year to the end of March, this increase was “largely due to a 5 per cent pay award effective from 1 April 2022 and a one-off cost-of-living payment” to the majority of employees, excluding the highest-paid staff members.
The increase in staff costs contributed to the charity recording a £2m deficit over the course of the year, compared with a £25m surplus in the previous 12 months.
The charity employed an average of 7,469 people over the course of the year, up from 7,317 in 2021/22.
The charity’s total expenditure increased by £33.6m to £312.4m, a 12 per cent increase on the year before, which Barnardo’s attributed to “the conscious decision to increase investment”.
Total income increased by 5 per cent to £315.3m, with income from charitable activities growing by £5m to £184.5m.
But it also recorded investment losses of almost £5m, which contributed to the overall deficit.
The charity spent £85m on raising funds, an increase of more than £13m on the previous year, including a £3m rise in money spent increasing legacy donations.
Barnardo’s reported a pension deficit of £79.9m at the end of 2022/23, up considerably from £52.2m recorded 12 months previously.
The accounts say the increase in the deficit was caused by a change in asset values linked to the current valuation method.
The accounts say: “At the end of 2022/23, Barnardo’s was in a positive financial position.
“After taking tough and prudent decisions at the height of the pandemic, we have been able to return, cautiously, to a sense of normality.
“Our financial result for the year was stronger than we had budgeted for, even with the challenging inflationary environment.
“We had planned for a larger deficit but robust financial control, positive trading in our retail stores and a continued bounceback in fundraising activity following the pandemic contributed to a more positive result.”
A statement signed by Lynn Perry and John Bartlett, chief executive and chair of Barnardo’s respectively, said: “We are especially conscious of the need to support our hard-working colleagues in the context of cost-of-living increases.
“That’s why we took the decision, part-way through the year, to make a one-off payment in addition to the annual salary award.
“Meanwhile, we have been working towards a new approach to pay, reward and recognition that will allow us to continue to recruit and retain a talented, values-driven workforce.
“Following difficult and prudent decisions in the context of the Covid-19 pandemic, we moved into 2023/24 in a solid financial position, and we are continuing to invest in support for children and families, in improving our systems, and in supporting our colleagues.”
Bartlett has since stepped down as chair, being succeeded by Mark Wood.
The charity employs 95 people earning more than £60,000, compared with 66 people the year before, with the highest earner making between £170,000 and £179,999 a year.