Income at Save the Children UK fell by almost £50m last year, amid cuts to the government aid budget and ongoing disruption caused by Brexit and the Covid-19 pandemic.
Save the Children UK’s latest accounts, published today, also show the charity has taken legal advice on a potential multimillion-pound liability in its pensions scheme.
The charity raised £240.4m in the year ending in December 2021, down 17 per cent from the £288.7m raised in 2020, the documents show.
But spending dropped by the same proportion, from £283.1m to £235.9m, meaning the charity recorded a surplus of £7.4m, after investment income was included.
The annual report says: “The UK government’s decision to reduce the aid budget from 0.7 per cent to 0.5 per cent [of gross national income] led to budget cuts for several of our projects.”
It adds: “The UK’s transition period for leaving the European Union also ended, which meant we lost access to EU development and humanitarian funding.”
The cut to global development spending was widely criticised by aid charities when it was announced in 2020.
Save the Children UK received grants from the UK government worth £38.6m in 2021, compared with £62.9m in 2020, down by more than a third.
Funding from charitable trusts fell even more sharply, from £20m in 2020 to just £3.9m in 2021, the accounts show.
Trading income partly recovered after Save the Children UK was forced to close its charity shops under pandemic restrictions in 2020, growing from £4m to £7.1m, but the shops network still recorded a small overall deficit.
The charity said it expected its trading to return to profitability in 2022.
The accounts also warn there are “significant uncertainties” in the charity’s pension position, after a review last year found that past amendments to the scheme might have broken rules in place at the time.
Save the Children UK said it was “seeking court directions” on the historical changes and had received legal advice that the liability could be anywhere between zero and £60m if the amendments were not valid.
The accounts say that no financial obligation would arise until a court judgment was reached, which is not expected until towards the end of 2024.
The total number of staff at the charity, measured as full-time equivalent roles, was slightly down from 902 to 880.
Save the Children UK’s reserves were stable at £33.1m, in line with the amount required under its reserves policy.
The charity told Third Sector that it dismissed four volunteers from their roles in 2021 after upholding safeguarding complaints. Two of these incidents were referred to the Charity Commission and three to the police.
A spokesperson said safeguarding was Save the Children UK’s “top priority”, adding: “When considering reporting to the police, we err on the side of caution and often pass on information on even lower-level cases, which may not meet the criminal threshold.”
Writing in the introduction to the accounts, Gwen Hines, chief executive of Save the Children UK, and Tsitsi Chawatama-Kwambana, chair of trustees, said that in 2021 children in the UK and around the world had faced “the triple threat of Covid-19, conflict and climate change”.