Age UK workforce shrinks by 300 after trading company restructure

25 Jan 2018 News

Age UK has reduced staff numbers by more than 300 and seen income fall by £18m after a restructure of its trading subsidiary.

In its latest accounts, running to March 2017, the charity says it restructured its trading subsidiary, including exiting the energy market, following a case report by the Charity Commission in April 2016.

The average number of full-time equivalent staff employed by the charity group fell from 1,854 in 2015/16 to 1,548 in 2016/17.

This change is due to its trading arm reducing staff by 333, while the charity’s own headcount increased by 27.

The Charity Commission investigated concerns regarding the charity's commercial activities in 2016 and in a case report, published in April that year, warned that the charity faced a "significant risk" over its relationship with E-on and its involvement in the energy market.

Diane Jeffrey, the charity’s outgoing chair, says in the introduction to Age UK’s accounts: “Last year, I explained that we had started a big programme of work to implement the Commission’s recommendations.

“A year later, this is bearing fruit. For example, we have undertaken a comprehensive governance review with the support of external experts and have made many improvements as a result.”

Income drop

Age UK’s income for the year fell from £168m in 2016 to £150m in 2017, including an £8m drop in income from its trading activities.

The charity’s net expenditure on charitable activities also dropped significantly, from £81m to £73m, with most of this being a reduction in spending on information and advice services.

Age UK says its decision to exit the energy market and sell its personal alarms service, Aid-Call, in 2015/16 had a “significant effect” on the income from its trading subsidiaries.

The charity says its financial services trading activity also continued to face tough trading conditions, leading to a £3m reduction in income year-on-year.

However, Age UK Trading CIC has began a three-year investment programme in its retail activities, which will see the refurbishment of hundreds of its shops, the opening of new shops, and the closure of the lowest-performing ones.

This investment will be covered by the proceeds from the sale of Aid-Call, it says.

New trading brand to be unveiled shortly

Jeffrey salso said that the trading subsidiary was being rebranded.

“The Commission asked us to make sure our trading company’s marketing materials were as clear as they could possibly be about the company’s relationship with the charity; specifically that the company trades for profit and then gifts the net sums made to the charity to support our charitable work.

“There can be no ambiguity or suggestion that the trading company is subsidised by any kind of ‘charity pricing’. This has spurred us on to accelerate work that was already underway to re-brand our trading activity, and we will shortly introduce a new brand, name and design for our trading activity covering our financial services and independent living products.”

Governance changes

The accounts also said that new trustees had been appointed “to ensure a balance of business and charitable skills and experience”.

Age UK produced a document to clarify the governance relationship between the board and its trading subsidiaries, a new statement of the principles its trading subsidiaries should follow and established a committee to regularly review the charity’s trading products.

The charity’s trustees also agreed the rebranding of non-primary purpose trading activities such as financial and independent living products carried out by Age UK Trading CIC and Age UK Enterprises Ltd.

 

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