The latest Hospice UK and db associates benchmarking data for the nine months to December 2025 presents a sobering picture. On the surface, the sector outperformed its own grim expectations, with participating hospices recording a deficit of £50M, significantly lower than the £93M budget. But as you dig deeper, the real story becomes cleat; the 'better than expected' performance cannot hide evidence of a sector in retreat.

For a start, the deficit is a large increase on the £35M the same cohort recorded for the period last year. Moreover, much of the variance against budget stems from significant underspend, especially in payroll costs. This might look like fiscal discipline on a balance sheet. But the reality is more painful. These "savings" are frequently driven by chronic recruitment challenges or deliberate, difficult decisions to cut services or support costs. Hospices are not finding efficiencies; they are overseeing a managed decline.

The Inflationary Treadmill

Despite a cooling of headline UK inflation, the hospice sector remains trapped on an inflationary treadmill caused by the need to match NHS salary increases - but without the security of being a state run service. The cumulative 30% increase in payroll costs over the last three years has fundamentally shifted the cost base of hospice care.

Moreover, with 94% of hospices expecting statutory increases to fall behind inflation, the gap between the cost of care and government support is going to widen. When the average statutory funding increase is pegged at 1.5% against a 3.4% CPI, the mathematical reality is the inevitable reliance on communities to pick up the slack.

Resilience in the Balance

The resilience of the sector is being tested in real-time. We see this most clearly in the erosion of reserves, which have dropped to an average of nine months, down from ten last year. Perhaps more tellingly, nearly a third of participating hospices are now operating with less than six months of free reserves.

As we look towards a new financial year, the strategic challenge facing the sector moves beyond deficit management. We must ask: at what point do service cuts fundamentally compromise your mission? With 57% of hospices having made or considering reducing frontline services, that point may be closer than we dare to admit. 

Indeed, are we reaching an irreversible tipping point for the charitable hospice model?