£800m cost to North East of Northern rock fiasco

THE full impact on the region of the near collapse of Northern Rock can finally be revealed today.

northern rock

THE full impact on the region of the near collapse of Northern Rock can finally be revealed today.

Experts looking at the bank’s fall and rise and its impact across the region show nearly £800m wiped of the North East economy.

More than 2,600 jobs went, both at Northern Rock and elsewhere, a detailed report commissioned by development agency One North East has revealed.

In total, 1,288 Northern Rock employees were made redundant, nearly two thirds of whom were made compulsorily redundant.

The previously unreleased report also reveals that more than 200 workers had not found a job 18 months after the bank’s collapse, and of those who have found work, the average pay is 8% less.

Regeneration bosses were told that, in the view of experts, further targeted support for those still to find a job “would not represent value for money”.

Around three fifths of those made redundant were female, and these were more likely then male workers to be handed compulsory redundancies.

“It appears that relatively few former Northern Rock workers have found employment in similar roles or industries,” the experts warn.

As a result it is thought that even five years after the September 2008 run on Northern Rock, the regional economy will be at least £33m a year worse off.

There was also a warning that some of those who found jobs would essentially have been “displacing” others and reducing the overall regional work force.

The report was commissioned by One North East and put together by regeneration experts Regeneris Consulting and specialists at Durham University.

There is praise for One North East in its swift support role.

The evaluation report states: “This strategic response was swift and decisive. One North East senior executives worked behind the scenes at the highest level with Northern Rock and the Treasury to understand the potential impacts and brought together a high level response group drawn from key stakeholders within the region.”

Last night Neil Foster, policy and campaigns officer at the Northern TUC said the report showed the need for Northern Rock to be re-mutualised to provide a safe and secure future.

He added: “The report from One North East released today is a valuable piece of work measuring the devastating impact Northern Rock’s collapse had on businesses and workers across the North East. Its findings need to be aired and discussed as a matter of urgency so that we learn important lessons for the future.

“I don’t think the public has a thirst for the banks to go back to ‘business as usual’. There is a powerful case for a more diverse and risk averse financial sector which can regain public trust over time. The mutual model could certainly prove to be a successful way forward.”

Ian Williams, One North East’s director of business and industry, said: “This report recognises the swift and decisive response of One North East and the Northern Rock senior management team to the major job losses at the bank two years ago.

“The report shows that around two thirds of the workers surveyed found new employment at a time when the economic recession was at its height.

“It was important to analyse the work of the response group that One North East led to assess how effective it was in supporting staff to find new work.

“The report allows us to build on the strengths of the partnership approach with Northern Rock senior management and we have successfully applied those principles in our support for Nissan and Corus and the major job loss situations both firms have managed in the region.”


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