Virgin Money has announced plans to invest £1m in the North East after its offer to part-fund the Northern Rock Foundation fell through yesterday.

In 2015 Virgin Money has pledged £850,000 to the charity OnSide to build a Youth Zone centre and will be working alongside the Northern Rock Foundation and others on this project. Onside has already built five Youth Zones in Carlisle, Wigan, Bolton, Blackburn and Manchester.

Jayne-Anne Gadhia, chief executive of Virgin Money, said: “We are excited to be working alongside the Northern Rock Foundation to support the creation of the North East’s first Youth Zone, which will benefit young people in the region for generations to come.”

Virgin Money is also planning to extend its links with the Tyne and Wear and Northumberland Community Foundation by setting up a £150,000 charitable fund that will provide grants to young people with issues such as homelessness or helping them to set up a business.

It is also in talks with Newcastle City Council about creating a programme to revitalise empty properties in the city. More details will be available in the new year.

Yesterday the Northern Rock Foundation announced that it will probably close after a funding deal with Virgin Money of £1m per year for the next five years fell through when the organisations concluded that it was unlikely to raise an extra £3m per year from other local businesses.

Loss of Northern Rock Foundation a ‘blow’ for the region

Chi Onwurah, Labour MP for Newcastle upon Tyne Central, who had previously urged Virgin Money to find a way of funding the Foundation, said: “I’m very sad to see the demise of Northern Rock as a grant-giving organisation. It has made a remarkable contribution to the North East for many years now and has been a caring, innovative, inclusive and supportive friend to the North East, rooted in our region and working in our region.”

She welcomed Virgin Money’s commitment to funding the Youth Zones but added: “I am concerned however that the work the Foundation undertook on hard-to-reach communities, inclusion and refugees will not be replaced and will leave a gap in the region.”

Jo Curry, chief executive of Voluntary Organisations’ Network North East (Vonne) described Virgin Money’s announcement as “great news” and said: “It would have been very easy for them to walk away from prioritising the North East and instead set up a national programme matching their customer base, so we thank them for their local commitment.”

She also paid tribute to the impact that the Northern Rock Foundation has had on the area and said that while the news “is not a shock but will nevertheless be a blow” because the “anticipated closure couldn't come at a worse time as the charity sector here in the North East faces a ‘perfect storm' of public sector funding cuts and an increase in demand for services”.