Age UK takes 'remedial action' to address criticism of trading arm

13 Jan 2017 News

Age UK has taken "remedial action" to address concerns about the relationship between the charity and its trading arm after facing criticism last year, according to chief executive Tom Wright CBE.

In the charity’s latest set of accounts published this week, Wright said that although fundraising performed well during the year, trading activities and income-generating charitable activities fared less well.

“Market conditions in financial services and in the charity retail sector have been difficult,” said Wright.

The charity faced criticism in the media last year over its commercial deals, including a deal with energy provider E-on in which the charity recommended tariffs to beneficiaries which were more expensive than others on the market.

The Charity Commission investigated concerns and in a case report, published in April, warned that the charity face a "significant risk" over its relationship with E-on. 

Improvement after 'remedial action'

But he said the charity saw an improvement in the second half of the year after taking "remedial action".

“This year has illustrated the benefits of both fundraising and trading,” he said. “Together they have enabled us to do much more than would have been possible otherwise. This mix of income enabled us to spend £80.8m on charitable activity, much more than if we had relied upon fundraising alone.”

During the course of the year, Age UK conducted a strategic review its trading activities “in order to focus its attention on core products and services”, according to a statement in the report by Wright. The review led to the sale of the charity’s personal alarm service Aid-Call last autumn as well as the closure of Age UK Training which was driven by the withdrawal of its main funders.

Responding to recommendations by the Charity Commission last April about Age UK’s partnership with E-On, the charity said it has begun an “extensive programme of work to consider the Charity Commission’s recommendations and put in place changes that will further improve the governance and transparency of the relationship between the charity and Age UK Trading CIC”.

Chair of Age UK, Dianne Jeffrey, said last year was one of “reflection for many large charities, driven by a public debate about how we raise our income”.

“Age UK’s trustees take very seriously the trust of everyone who donates to us or who buys products and services from our trading subsidiaries,” she said.

The charity's accounts reveal that income from trading activities dropped slightly over the year from £110.1m in 2015 to £106.8m last year. Much of the fall in income came as a result of a £2.1m drop in income through its financial services activities and a drop of £1.1m in retail income. However, the charity’s At Home service saw a boost of just over £1m over the year.

Redundancies

The accounts also reveal that the charity spent almost £3.5m on redundancies over the year, with payments of more than £500,000 made to some of its highest paid employees. The figure is a significant jump from the previous year when it spent £789,178 on redundancy payments.

According to the annual report, many of the redundancies are attributed to the closure of Age UK Training.

 

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