‘Picture is rosy’ for staff seeking work

THE man tasked with finding work for the thousands of Northern Rock staff facing the axe has said the North East is “remarkably well placed” to handle the redundancies.

THE man tasked with finding work for the thousands of Northern Rock staff facing the axe has said the North East is “remarkably well placed” to handle the redundancies.

Alan Clarke, chief executive at development agency One NorthEast, has promised staff at the troubled bank that his rapid response unit can find them all jobs.

Mr Clarke last night said there were more than 1,000 jobs available in the financial services sector in Tyne and Wear, out of some 21,000 current vacancies.

He will be heading the Government appointed rapid response unit designed to find employment for the redundant workforce.

And despite the 2,000 losses, Mr Clarke said he was confident the region’s economy was not at risk and would continue to grow.

“This time of year there are slightly fewer jobs available, but at the moment there are 21,000 unfilled vacancies in the region, and 1,100 in financial services within the travel-to-work area,” Mr Clarke said.

“There are financial companies looking to expand in the region and others that we want to attract to the region. It paints quite a rosy picture, because with the Metro system we have such a good travel-to-work area and we have a lot more opportunities for people.”

Mr Clarke and One NorthEast have been in discussion with the bank for three weeks.

He said: “Without being complacent I’m very confident that by working closely with the company and the partners in this we can help find new jobs.

“In some cases they might want to completely retrain and we can help with that and some might want to set up their own company and that is why we have Business Link North East helping as well.”

“Yes, we can make these comments about how these things will be all right, but on the day you get this news it obviously is bad and does lead to uncertainty and I would not want to overlook that, but there is help available.”

One NorthEast wants to see the region’s wealth-per-head rise to within 90% of the UK average. And Mr Clarke said that while he was not counting his chickens, he was sure the North East had not lost sight of this goal.

“The regional economy is the most resilient it has been for many years. In the last year or two, the growth rate in the region has surpassed the national average in three years out of four and we have far greater diversity in our economy.

“So yes, it will be a setback and it would be wrong to say it would not be, but we here have the prospect of a very viable bank going back into the private sector in three years’ time employing four thousand people-plus and in the meantime finding alternative employment for the other two thousand.”

Last night the leader of Newcastle City Council called on the public sector to go shopping for a financial services company to come to the North East and help absorb some of the Northern Rock jobs losses.

Coun John Shipley also said the Government ought to consider moving civil servants to the North East. “Despite the grim news about Northern Rock, this could be turned into an opportunity for the region to encourage other financial services sector employers to move into the region.

“There are a lot of skilled employees of a high standard who would be very attractive to an employer in that sector – those companies in the City of London, and internationally, looking to have back office functions in parts of the UK cheaper than London.

“There is a lot of interest in moving here as labour costs and land values are cheaper than the South East.

“I would also suggest Government itself looks at its own departments and sees whether there are jobs which could come to the North East.”

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Jobs created as well as lost

THE loss of so many jobs from the North East economy is always a blow to confidence and while the recent history of the region’s employment patterns suggests some room for optimism, the state of the finance market is a cause for concern.

Successive rounds of manufacturing job losses have taken a heavy toll on the region’s economy, but over time those jobs have been replaced.

The Journal has carried many thousands of words down the years bemoaning the injustice of skilled and loyal workers being shown the door, but the resilience of our people and communities remains.

The mix of the economy has shifted fundamentally, with thousands of coal and manufacturing jobs being cut, and a move to more technology and service-led companies, as well as call centre employment helping to fill the void.

While we have lost major employers such as Swan Hunter, Electrolux, LG Philips and Atmel in recent years, replacement jobs have been generated.

The concern for Northern Rock staff is that the credit crunch is likely to see financial institutions taking a cautious view of expansion – though fortunately Newcastle Building Society is an exception.

Northumbria University principal lecturer in accounting and finance Richard Slack said: "All the banks in the financial sector face the issue of the global credit crunch and money is tight across the market. It is highly unlikely that you will have any bank seeking to rapidly expand any part of its business."

Mr Slack also pointed to the effects of Northern Rock’s shrinking business on those it does business with in the region.

He said: "The immediate impact is of the job losses, but beyond that it will be the suppliers to Northern Rock.

"There will be a lot of businesses within the North East that will be directly affected by Northern Rock. The Rock will be a very large commercial customer for some suppliers."

While sympathetic to those losing their jobs, North East Chamber of Commerce chief executive James Ramsbotham said it was important to see the job cuts in a wider context.

He said: "Most organisations have 10% staff turnover annually, so Northern Rock might lose 600 staff each year anyway.

"We also need to remember that the North East has taken in 60,000 East European immigrants over the four years since the EU was enlarged – that indicates the number of jobs we have created."

Applegarth has nothing to say

FORMER Rock boss Adam Applegarth had no comment on the day it was announced a third of staff were to go.

Dressed in a brown sweater over a purple T-shirt, the 45-year-old, now bearded, arrived home in Matfen, Northumberland, in his BMW X5.

Asked: "Do you have anything to say about 2,000 staff losing their jobs?" he replied: "No comment."

Mr Applegarth was educated at boarding schools in Durham and Cumbria before Durham University, where he met his wife Pat. He became the Rock’s youngest chief at 39, having joined as a management trainee.

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Uncertainty pervades Gosforth

SHOPKEEPERS in the area surrounding Northern Rock’s Gosforth headquarters yesterday expressed anxiety about the knock-on effects of the redundancies.

With the bank’s employees flooding on to the High Street on their lunch breaks and after work, there were fears the local economy could suffer.

Jane Wilson, the owner of sandwich shop Bocadillos in Gosforth High Street, said: "We have quite a few Northern Rock staff coming here in their lunch breaks, so it might affect us.

"In the future, the whole health of Gosforth in general will suffer.

"For shopkeepers in general I think it is worrying because a lot of the workers use shops on the High Street – there’s something for everyone."

At lunchtime, Rock workers were refusing to be drawn on their future.

One employee, who did not want to be identified, said: "We are still waiting to find out what is happening exactly. It’s all up in the air at the moment. The feeling around the place is not good."

Another worker, who also wanted to remain anonymous, said: "No one really knows what’s going on at the moment. I don’t want to say anything else."

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Buoyant mood in firms will generate vacancies

THERE are signs that the region’s job market is big enough to absorb the influx of ex-Rock employees.

CBI North East director Sarah Green believes the region is in good shape to weather the latest mass-redundancy hammer blow.

She said: "We’ve been involved in a meeting at One NorthEast along with a number of regional stakeholders to find the best response for the region, Northern Rock and its employees.

"We see one of our key roles as signposting regional employers who have opportunities available for skilled staff towards the relevant public bodies looking to support Northern Rock workers." In finance, while almost all institutions have been hit by the credit crunch, there are some players still recruiting here.

One is Newcastle Building Society, which plans to create 500 jobs in the region over five years.

It has already recruited about 20 former Northern Rock management and is keen to take on other staff from the bank.

Newcastle’s chief executive Colin Seccombe said: "The North East is home to a highly skilled workforce in the financial services sector, and we support the One NorthEast-led employment taskforce to help find new jobs for as many former Northern Rock staff as possible.

"We are currently actively recruiting for a wide range of roles that could present an opportunity to some Northern Rock staff that may choose to take up redundancy offers.

"We plan to maintain steady growth and currently have around 50 vacancies, with further vacancies planned as this growth is realised."

A recent survey by recruitment agency Manpower found 11% of North East employers plan to hire between April and June this year, against a national average of 6%.

Manpower regional manager Melissa Coutts said: "After a shaky start to the year employer confidence is booming again in the North East with employers intending to keep hiring this spring."

Most cuts in first year, loans repaid in four

ALISTAIR DARLING yesterday said the final number of job losses at Northern Rock depended on market developments amid financial turbulence.

The Chancellor moved to reassure Rock savers and staff, saying Government guarantees remained and depositors’ money was still "safe and secure".

Northern Rock was committed to providing the best support to staff while One NorthEast was leading the Government’s response, he said.

In a written update to MPs, Mr Darling said the Rock’s future was based on four "strategic priorities" to rebuild it as a viable private savings and mortgage bank. He said the bank would halve in size while maintaining a "modest" level of new loans and the 6,500-strong workforce would fall by about a third by 2011 "with the majority of the reduction likely to occur in the first year.

"The final figure will depend on the business plan ultimately adopted and the evolution of the business in the light of market and economic developments."

Public loans and guarantees of billions of pounds would be repaid "progressively" over three to four years and retail deposits would increase modestly to form a larger share of bank funding. Risk management would be strengthened.

Mr Darling confirmed plans to continue State aid to Northern Rock had gone to the European Commission on Monday.

The Rock will submit a business plan to the Treasury for approval by the end of March. Bank of England support will be replaced with a Treasury loan over the next year.

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Shrinking business painful but needed

GORDON BROWN yesterday promised to maintain economic stability as he faced renewed calls to secure Northern Rock’s future amid worldwide financial turmoil.

The pledge came after Chancellor Alistair Darling updated the Cabinet about the global credit crunch and Northern Rock after discussions with US and international authorities, the Bank of England governor and chairman of the Financial Services Authority.

The Prime Minister’s official spokesman also said the UK economy’s "fundamentals" remained strong, with the country well placed to deal with international turmoil.

And the head of development agency One NorthEast is leading the response to Northern Rock job losses with councils, business and other regional agencies, said the spokesman.

"The Prime Minister’s message is that we are taking action in order to deliver stability of the economy and we are asking the chief executive of the regional development agency to co-ordinate and work with the agencies that I have listed in order to coordinate support for those affected," he added.

Liberal Democrat Treasury spokesman Vince Cable said Northern Rock’s future remained uncertain amid international financial problems.

"The news that Northern Rock’s new management believes that the bank has a long-term future is welcome. The decision to contract the size of the bank will be painful in the short term, but necessary to safeguard the business in the coming years.

"However, for the 2,000 people losing their jobs, the continued presence of Northern Rock in the North East will be of little consolation.

"It is critical that the Government makes every effort to ensure that those made redundant are given rapid help in finding alternative work, to prevent any further increase in unemployment in the North East."

He said taxpayers were still owed about £24bn by Northern Rock and repayment must be a priority.

"Northern Rock does at least now have a future, but amidst the turmoil in the financial markets, it is still not a certain one," Mr Cable said.

Conservative shadow Tyneside minister and business secretary Alan Duncan expressed regret about job losses, but said the bank would have to shrink before growing.

"Northern Rock now needs space so it can go about the best possible restructuring over the next couple of years."

Conservative Treasury spokesman and shadow Wearside minister Mark Hoban said the full extent of changes to Northern Rock would only be known once the Government received clearance on the business plan from the European Commission.

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