ED Miliband has told Sir Richard Branson he must think again after axing the funds behind the North East’s most important charity.
The Labour Party leader said Sir Richard had to look seriously at the consequences of scrapping the cash behind the Northern Rock Foundation.
The Journal now understands Virgin had wanted to loan the charity funding in order to turn it into a housing-based group, with funds made available to the group to help it renovate properties for vulnerable young adults nationally.
Virgin Money confirmed last month it would no longer be handing over money to the Foundation, with the charity announcing it would close down as a result. The Foundation had over the last 16 years handed out more than £215m to good causes, much of that going to charities which worked with some of the region’s hardest to reach groups, including sex workers and drug abusers.
Virgin Money, it has emerged, asked the Foundation if it would instead accept a £1m loan and use the money to provide housing, a cause thought to be a better match with the bank’s image.
Asked what his message was to Sir Richard, Mr Miliband said: “I’m deeply concerned on this, just as Chi Onwurah rightly is.
“I think they need to think again about that they have done. Everyone hated what happened to Northern Rock, but the Northern Rock Foundation played an important role in this region and I think Virgin should look again at their responsibility here and what they can do.”
He added: “When it comes to big firms we need that sense of community spirit, and we need rules, rules on the way companies and markets work. One of the big choices we face now, whether on banks or energy companies, is do we have rules that work for everyone?”
Last night Newcastle Central MP Chi Onwurah, who Mr Miliband praised for her efforts to force a Virgin Money U-turn, said she was disappointed when she heard that the bank had suggested such dramatic changes to the Foundation.
“I can understand entirely why the Northern Rock Foundation did not want to become a housing association with a £1m Virgin Money loan. They have a great record of working with some very important charities.
“And so I think Ed is absolutely right to call on Richard Branson to reverse the bank’s decision. He should look at the contribution that Northern Rock Foundation has made to the region but also what corporate citizenship should mean to a company such as Virgin Money and consider reversing the bank’s decision and show that the company wants to be a part of our community.”
The Northern Rock Foundation had previously enjoyed healthy funds thanks to an arrangement which saw it get 5% of pre-tax profits from the high street lender, a deal which changed following nationalisation in 2008.
When Sir Richard’s Virgin Money took over the Newcastle-based Northern Rock in 2012 it inherited a Government-approved deal to hand over 1% of pre-tax profits. Virgin Money handed over around £1.5m, even though it had not made enough money to trigger a payment.
The bank declined to comment on Mr Miliband’s call.
It had previously said: “We are committed to continue to support the North East community strongly in a variety of ways. We already work with over 150 charities in the North East through Virgin Money Giving, and have helped North East fundraisers to raise over £10m since 2009.”
Mr Miliband was in the region a week after UK Independence Party Nigel Farage headed to Tyneside in a bid to win over Labour voters. Mr Miliband, though, insisted Labour’s North East heartland would “not be fooled.”
“Let’s see what happens in two weeks’ time,” Mr Miliband said. “Nigel Farage does not have the solutions. I don’t think the North East will back someone who wants to keep the flame of Thatcherism alive.”