Virgin Money’s decision to end its charity links to the region is “typical of banks putting profit before people”, an MP has warned.
Labour’s Dave Anderson was among many to speak out yesterday over the decision by Richard Branson’s Newcastle-based bank to end funding for the Northern Rock Foundation.
Over 16 years the charity had handed out more than £215m, with a particular focus on helping groups working with some of the most disadvantaged in the region.
That Northern-focus saw the Foundation become one of the most important backers of good causes in the North East, thanks to a 5% share of pre-tax profits at Northern Rock.
That profit link was reduced to 1% by the Government after the financial crash, a system Mr Branson’s bank inherited. After handing over £1.5m, more than it needed to under the agreement, the bank this week said it would no longer be funding the foundation.
When the Northern Rock crisis started in 2007 Mr Anderson led calls for the foundation to be protected with a Parliamentary early day motion in which he said he wanted to “expresses concern that the foundation is at risk as its funding comes from 5% of Northern Rock’s pre-tax profits.”
The MP’s motion added that the work of the foundation should “be taken into account in negotiations on the future of Northern Rock and the potential impact of its break-up on the most vulnerable in the North East.”
Mr Anderson told The Journal: “This is a very sad announcement and sadly typical of banks putting profit before people.
“The North East has lost a much-cherished funding resource, lost because of this crass behaviour. This decision gravely endangers the work of hundreds of community and voluntary organisations which directly benefit children and young people at risk, older people in care and need of support and victims of domestic abuse and crimes of hate.”
Also speaking out was Houghton and Sunderland South MP Bridget Phillipson. The Labour politician said: “It is extremely disappointing that an agreement could not be reached with Virgin Money to secure the future of the foundation and the wonderful work it supports in our region.
“The foundation has been an invaluable source of support for community groups across the North East for more than 15 years, including on Wearside. It will be truly missed.”
And Durham MP Kevan Jones added his voice to criticism of the bank, calling for a boycott after the unpopular decision.
Jo Curry, head of the Voluntary Organisation Network North East, said funders will need to work together to plug the gap.
She said: “It is important that we all pull together now. National funders must look at need and deprivation first. They must fund beyond their comfort zones, and they should learn from the Northern Rock Foundation and Lloyds Foundation by looking to fund core costs, salaries and multi-year grants. National Government must stop talking about loans and reboot their approach to Big Society.”
Northern Rock Foundation chairman Alastair Balls said the bank had “missed a trick” in marketing terms by not committing to fund a Virgin Money Foundation.
“I think they have lost something they could really benefit from,” he said.
“The foundation would have supported itself from its savings for four years while the bank grew its business.”
Virgin Money said the foundation wanted more money than was available, adding it had “wanted to do something more collaborative.”