Future of the Northern Rock Foundation uncertain 1

Finance | Kirsty Weakley | 15 Aug 2011

Concerns have been raised about the future funding of the Northern Rock Foundation, as the new owner will not be obliged to support the Foundation when the Northern Rock Bank is privatised.

Jean Burnside, chief executive of homelessness charity Key Project, said her organisation had recently been awarded a grant of £120,809 over the next three years but had been told that this was probably the last.

She said: “The Northern Rock Foundation has been very supportive of Key Project and the work we do over a number of years."

The award funded the advice and prevention work the charity does, but she said “that area of our work will disappear without the funding from the Foundation.”

She added that it was not just about funding for projects but the training funds available to help small charities train their staff.

Motion in the Commons

Gateshead MP Ian Mearns tabled a motion in the Commons to try and force the new owners of the bank to commit to charitable giving and in July he led a delegation of MPs who met with the Treasury minister Mark Hoban to discuss the subject.

Mearns said: “It was made clear that there will be no obligation for bidders to take on the Northern Rock Foundation in the future, but we were told the government would look favourably on any plans for the foundation.

“He recognises the importance of the foundation to the region, but despite this, the retention of the charity is a criterion bidders do not have to meet.”

Penny Wilkinson, chief executive of the Northern Rock Foundation said: “The Foundation had some £40m in reserves at the end of December 2010. We have decided to draw on our capital to make grants over the next five years, as part of a renewed strategy.”

She added: “As the sale process for Northern Rock plc progresses we would expect that any prospective bidders will want to discuss with us how they would address future support for the Foundation in any bid they make.”

The Northern Rock Foundation was set up in 1997 when the bank de-mutualised. The bank gave the Foundation 5 per cent of its pre-tax profits until the bank was taken into public ownership at the end of 2007. In 2008 and 2009 the Foundation received £15m a year from the bank.

Last January the Foundation announced that it would receive 1 per cent of pre-tax profits from Nothern Rock plc on a rolling two-year rolling agreement.

Directory: Northern Rock PLC

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Bob
15 Aug 2011

Big Society????????........... another example of the "Bad Society" if you ask me where capitalism alone survives.

Why not simply adjust the selling price of the bank to enable continuation of the Foundation to become mandatory on the new owner ??!!

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