CHARITY and business leaders have hailed a Virgin Money pledge to give £4m to good causes as great news for the North-East.

Sir Richard Branson’s bank, which took over the collapsed Northern Rock in 2012, has added a further £3m to the £1m pledged for the Virgin Money Foundation last September.

Added to £4m-worth of fines extracted from misbehaving banks that Chancellor George Osborne pledged to the Foundation during a visit to Stockton last December, it takes the Foundation’s spending power to £8m over the next four years.

But the fund still falls short of the sums handed out by the fund's predecessor, the Northern Rock Foundation, which gave more than £225m to good causes in the region.

However, Virgin Money pledged to cover the full operating costs of the new Foundation, meaning every penny will benefit community projects.

Rob Wilson MP, the minister for civil society, said the Foundation would support disadvantaged communities and young people in the North-East and “help us to build a truly compassionate society, helping those who have the least”.

James Ramsbotham, chief executive of the North East Chamber of Commerce, hailed the pledge as “great news” and a fantastic opportunity; while Barbara Gubbins, chief executive of the County Durham Community Foundation, said it was very welcome.

“The loss of the Northern Rock Foundation has left a gap, so this will be very welcome. We have to make sure the groups in County Durham get their fair share,” she added.

Jane Hartley, chief executive of the Voluntary Organisations’ Network North East (Vonne), said it was very good news for smaller organisations and she was very pleased.

However, North Durham MP Kevan Jones said Virgin’s pledge of £1m a year was “paltry” and showed the “era of greed in banking continues”.

The Northern Rock Foundation was the North-East’s biggest charity, handing out £225m to good causes over nearly 20 years – dwarfing the Virgin Money Foundation budget – but it closed after the Newcastle-based bank, its sole funder, was sold to Virgin Money and talks between the two broke down.

Sir Richard Branson’s bank pledged £1m for community projects in the North-East last September and today (Monday, August 10) added a further £3m by 2019 – matching the Government’s commitment.

Some of the £8m total could be spent outside the region, although Virgin Money’s initial £1m and the Government’s £4m are specifically for the North-East and sources say the lion’s share of total pot will remain here.

Jayne-Anne Gadhia, Virgin Money's chief executive officer, said: “Virgin Money takes its social responsibilities very seriously in all of the communities in which we operate, but particularly in the North-East of England, given our acquisition of Northern Rock in 2012.

“I am therefore delighted to be launching the new, independent Virgin Money Foundation. Virgin Money will match the donation of £4m over four years pledged by the Government meaning the Foundation can make a positive and sustainable difference, initially in the North-East and over time across the whole of the UK.”

The Chancellor said: “I am delighted that we’ve been able to support the Virgin Money Foundation’s important work with 34m of funding provided from the fines levied on banks. This will be a real boost to local communities in the North-East.

“It is only right that we use fines from those who’ve demonstrated the worst values in our society to support charitable causes in the Northern Powerhouse that demonstrate the best of British values on a daily basis.”

The Foundation has appointed an independent board of trustees including Jo Curry, the former chief executive of Vonne, and Edward Wakefield, a former managing director of Greenhill investment bank, as its chair.

Grants will be available for community housing and building projects, youth schemes and tackling unemployment.

Applications are open now for grants of £10,000 to £50,000. There will be two rounds of grants over the next nine months, with the first awards expected to be made this November. For full details, visit virginmoneyfoundation.org.uk