Northern Rock Foundation slashes wage bill

ACCOUNTS released by the Northern Rock’s charitable foundation reveal fresh concerns about its future.

ACCOUNTS released by the Northern Rock’s charitable foundation reveal fresh concerns about its future.

The Northern Rock Foundation has awarded nearly £200m in grants to good causes around the region since it was formed 11 years ago.

But accounts submitted to the Charity Commission reveal the organisation has had to halve its staff in order to cut its wage bill.

Annual accounts for 2008, the latest available, show the foundation handed out £220,000 in redundancy payments after staff numbers were cut from 25 in 2007 to 12 in 2008.

The total salary bill dropped from £779,000 in 2007 to £617,000 last year – although redundancy costs pushed overall staff costs up from £930,000 to £964,000 over the same period.

Trustees for the foundation also tell the Charity Commission in the report it has enough definite resources to continue making grants for five years.

The foundation used to receive a percentage of profits made by the Northern Rock before the bank nearly collapsed in 2007.

Following the bank’s nationalisation in 2008, the Government agreed it would receive £15m for that year, 2009 and 2010.

But Chancellor Alistair Darling last month refused to promise any further public money after the current arrangement ends.

Mr Darling told The Journal: “If someone comes along and says we want to buy it (the Northern Rock bank), then the Foundation is one of the things we would want to look at.

“Ideally the whole point of a foundation is that you are getting money from the private sector going into the voluntary sector, rather than direct Government grant.”

And now the Tories are also refusing to make any promises about funding, despite the Foundation being a charity giver across the North East and Cumbria.

Mark Hoban, a key member of David Cameron’s Treasury team, said: “There is a lot to happen between now and next year.”

“We are not making any commitments and clearly the Government isn’t in a position to give a commitment either.”

The foundation’s report says the trustees are continuing to operate a “prudent” reserves policy to absorb any financial shock and provide sufficient time to address any “significant” change in funding.

“The current intention is to preserve sufficient funds so that the trustees may, with confidence, continue grant-making for at least a further five years, taking into account only known income and reserves.”

Closing reserves were £30.1m at the end of last year, compared to £29.3m in the previous year.

A spokeswoman for the foundation said the Chancellor had agreed funding of £15m a year in 2008, this year and 2010 as part of the nationalisation of the Rock bank.

The spokeswoman added: “He also called on the bank to work towards identifying a viable long term future for the foundation.

“We, of course, continue to communicate regularly with the bank in terms of its future and how the foundation will benefit, but the position is still to be concluded.

“The foundation has money set aside to honour all its long term commitments and has significant money in reserve which would enable its work to continue for a number of years to come.”

The latest round of grants made by the foundation had just been announced totalling more than £2m, said the spokeswoman.

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