MP calls for boycott of Virgin Money, as bank ends funding for Northern Rock Foundation

Northern Rock Foundation

Northern Rock Foundation

First published in News Darlington and Stockton Times: Photograph of the Author by , Reporter (Durham)

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.

Comments (6)

Please log in to enable comment sorting

7:27am Wed 23 Apr 14

hippyjohn says...

charity is a gift! not a right
charity is a gift! not a right hippyjohn
  • Score: 9

1:01pm Wed 23 Apr 14

DarloXman says...

I said on yesterday's article it's amazing that people get used to "free money" and then complain when the supply stops - rather than saying thank you for what they have had! A very ungrateful attitude.

Northern Rock donated 5% of their pre-tax profits?? In reality there weren't any profits - it was all just stolen money from a future period - the bank made massive losses as was never capable of making a profit with it's sub-prime loan book ! So these donations were in reality made by the tax payer!

Virgin Money is a business - it is a charity.

Absolutely ridiculous comment Phil Wilson - and not for the first time!
I said on yesterday's article it's amazing that people get used to "free money" and then complain when the supply stops - rather than saying thank you for what they have had! A very ungrateful attitude. Northern Rock donated 5% of their pre-tax profits?? In reality there weren't any profits - it was all just stolen money from a future period - the bank made massive losses as was never capable of making a profit with it's sub-prime loan book ! So these donations were in reality made by the tax payer! Virgin Money is a business - it is a charity. Absolutely ridiculous comment Phil Wilson - and not for the first time! DarloXman
  • Score: 7

1:35pm Wed 23 Apr 14

bambara says...

Northern Rock went bust, Virgin stepped in and saved many jobs which would otherwise have been lost.
They are neither morally nor legally obliged to fund the charity.

It seems a shame though, that a company which donated 5% of it's profits to charity was allowed to go bust while the tax payer was obliged to step in and bail out several others that are much less philanthropic.
Northern Rock went bust, Virgin stepped in and saved many jobs which would otherwise have been lost. They are neither morally nor legally obliged to fund the charity. It seems a shame though, that a company which donated 5% of it's profits to charity was allowed to go bust while the tax payer was obliged to step in and bail out several others that are much less philanthropic. bambara
  • Score: 2

3:01pm Wed 23 Apr 14

settheworldonfire says...

Why do people expect everything for free.....Virgin Money does not have to do this......Richard Branson supports man different charities all over the world....People in this country should wind their necks in and get on with their lives, instead of whinging about wanting free everything.....
Why do people expect everything for free.....Virgin Money does not have to do this......Richard Branson supports man different charities all over the world....People in this country should wind their necks in and get on with their lives, instead of whinging about wanting free everything..... settheworldonfire
  • Score: 7

3:08pm Wed 23 Apr 14

DarloXman says...

bambara wrote:
Northern Rock went bust, Virgin stepped in and saved many jobs which would otherwise have been lost.
They are neither morally nor legally obliged to fund the charity.

It seems a shame though, that a company which donated 5% of it's profits to charity was allowed to go bust while the tax payer was obliged to step in and bail out several others that are much less philanthropic.
Northern Rock was not allowed to go bust - it was forcibly taken over by the tax payer (Brown's Government) to prevent a bankruptcy. The shareholders where not compensated (as there was no value in the bank - just liabilities) but the savers were protected in full and the majority of the staff retained their jobs.

The bank was a shambles - total mismanagement for years. At least Virgin Money have continued to protect the staff jobs and have remained in the region - what does Phil Wilson want - Virgin Money to close down the North East operation and move the call centre overseas?? Idiot!
[quote][p][bold]bambara[/bold] wrote: Northern Rock went bust, Virgin stepped in and saved many jobs which would otherwise have been lost. They are neither morally nor legally obliged to fund the charity. It seems a shame though, that a company which donated 5% of it's profits to charity was allowed to go bust while the tax payer was obliged to step in and bail out several others that are much less philanthropic.[/p][/quote]Northern Rock was not allowed to go bust - it was forcibly taken over by the tax payer (Brown's Government) to prevent a bankruptcy. The shareholders where not compensated (as there was no value in the bank - just liabilities) but the savers were protected in full and the majority of the staff retained their jobs. The bank was a shambles - total mismanagement for years. At least Virgin Money have continued to protect the staff jobs and have remained in the region - what does Phil Wilson want - Virgin Money to close down the North East operation and move the call centre overseas?? Idiot! DarloXman
  • Score: 9

7:33pm Wed 23 Apr 14

peter laidler says...

As a mere plebeian I am sure there are many more patricians in the North East than let on. Shame that not more of them are philanthropists. Why cant they get there hands in their pockets?
As a mere plebeian I am sure there are many more patricians in the North East than let on. Shame that not more of them are philanthropists. Why cant they get there hands in their pockets? peter laidler
  • Score: 2

Comments are closed on this article.

Send us your news, pictures and videos

Most read stories

Local Info

Enter your postcode, town or place name

About cookies

We want you to enjoy your visit to our website. That's why we use cookies to enhance your experience. By staying on our website you agree to our use of cookies. Find out more about the cookies we use.

I agree