MP calls for boycott of Virgin Money, as bank ends funding for Northern Rock Foundation (From The Northern Echo)
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MP calls for boycott of Virgin Money, as bank ends funding for Northern Rock Foundation
LABOUR MPs spoke of their anger tonight (Tuesday, April 22) after it emerged the North-East’s biggest charity, the Northern Rock Foundation, is to close.
Talks between the Foundation and its sole funder, Virgin Money, have failed to produce a deal and leaders say closure is now inevitable.
Chairman Alastair Balls said it was very disappointing.
But Labour MPs went further, with Sedgefield’s Phil Wilson saying a multi-billion pound business had taken on a North-East institution and closed it at the first opportunity and Kevan Jones (North Durham) calling for customers to boycott the firm.
Chi Onwurah (Newcastle Central) said she was very disappointed given the “personal commitment” made by Virgin chief Sir Richard Branson to the region during his takeover.
Jo Barnett, head of social enterprise at Virgin Money, however, insisted it had tried hard to find a way to continue working together with the Foundation and would continue to “support the North East community strongly in a variety of ways”.
Labour blamed the Government for failing to secure the Foundation’s long-term future in a legal agreement.
But as far back as 2011 Treasury minister Mark Hoban said its fate would be determined by whoever bought the Rock.
Over 16 years, the Foundation has handed out more than £200m to good causes, benefitting from a covenant guaranteeing it five per cent of Northern Rock’s annual profits.
But the Gosforth-based giant famously collapsed after the first run on a UK bank in 150 years and was taken into public ownership in 2008.
Over the following three years, the Foundation received £15m a year; and since Virgin Money bought the bank for £747m in 2012, it has donated £1.5m.
The failure of talks on its future puts 12 jobs at risk.
A Virgin Money spokesman refused to say what the sticking point had been, only that the Foundation did not consider its proposals to be of common interest.
A Foundation spokeswoman said Virgin Money had selected a limited number of projects to be jointly funded, but none included any funding for the Foundation itself and trustees felt these projects either replicated the work of others or failed to target priority areas of need.
With no other funding source, trustees will begin an “orderly wind down”, she added.
The Foundation expects to award £7m this year. But current grant programmes will close at the end of 2014 and further announcements about how the Foundation’s remaining money will be spent are expected in coming months.
Mr Balls said Foundation trustees were keen to ensure its funds were used to achieve significant benefit in the North-East and Cumbria.
Ms Barnett said the Foundation had contributed to some fantastic work and Virgin Money was proud to have donated £1.5m.
“We will continue to support the North-East community strongly in a variety of ways and look forward to establishing new partnerships to deliver a range of exciting new projects,” she added.
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