- This article has been updated; see final paragraph
Age UK’s income from trading activities fell by £10m last year because of changes in its strategy, the latest figures show.
The charity’s accounts for the year to 31 March 2018 show that net income from trading activities fell from £23.2m in 2016/17 to £13.4m last year.
The total income from trading activities fell from £93.8m to £85.5m, the accounts show, but voluntary income rose by £5m to £58.2m.
The charity made a number of alterations to its governance and trading business in 2016/17 after media claims emerged in 2016 that it was earning £6m a year from selling a two-year, fixed-rate promotional tariff with the energy firm E.ON that was £245 more expensive than the firm’s cheapest rate for 2015.
That led to the suspension of the energy tariff and the charity’s decision to leave the energy market, which the 2016/17 accounts said were a major reason for a fall in income from its trading arm at the time.
A spokeswoman for the charity said changes to the charity’s strategy meant it withdrew from some areas of trading in 2017/18 while investing in others, such as charity shops.
Market conditions for funeral plans and insurance, areas in which Age UK Enterprises had been involved for many years, were also tough, the spokeswoman said.
The accounts show that the reductions in trading income can be explained mainly by falls of almost £5m in income from "independent living solutions" and £4m from "financial services".
Income from the charity’s retail activities remained about the same at more than £42m, according to the accounts.
This meant the charity had a £2.2m deficit for the year before other recognised gains and losses were included, compared with a surplus of £3.9m the year before, according to the accounts.
However, the sale of a subsidiary, income from the acquisition of a subsidiary charity and gains on the charity’s defined-benefit pension scheme meant that the charity had an overall increase in funds for the year of £2.5m.
The accounts do not explicitly show the charity’s gross total income and spending for the year, but reveal that the net income available for charitable activities was £67.6m, down from £73.1m the year before. Spending on charitable activities also fell, from £73.2m to £69.2m, according to the accounts.
The spokeswoman said: "Our total results for last year were on track and represent the balance we wanted to strike between maintaining charitable activity, investing in the future and responding to a changing external environment."
The latest accounts also say that the charity renegotiated a contract with its insurance partner, Ageas, to get a good price for customers.
The changes, which came into effect on 1 April, meant "a significant and ongoing reduction to the commission received by Age UK Enterprises", the accounts say, as well as local Age UK partners.
A £1.1m grant programme has been established to provide funding to the local Age UKs affected by the changes, and the charity’s accounts say that payments are expected until 2021.
The accounts also reveal that the changes have led to a restructure and job losses at Age UK Enterprises.
Redundancy costs at Age UK were £785,744, a slight increase on the £759,574 of 2016/17, and staff numbers dipped slightly from 1,548 to 1,503 full-time-equivalent employees.
- The article was updated on 4 January 2019 to make it clear that the charity's decision to exit the energy market resulted in a fall in trading income in 2016/17 not 2017/18