The government will provide £4m from Libor fines levied on banks to the newly created Virgin Money Foundation, which will be set up in the new year after the closure of the Northern Rock Foundation, George Osborne, the Chancellor of the Exchequer, has announced.
The NRF, a grant-maker supporting organisations that tackle disadvantage in north-east England and Cumbria, was set up by the bank Northern Rock in 1997. It received 5 per cent of Northern Rock’s pre-tax profits until 2007, then £15m a year between 2008 and 2010 while the bank was in temporary public ownership.
Northern Rock’s collapse and subsequent purchase by the bank Virgin Money put the NRF’s funding in doubt. Virgin Money offered the foundation £1m a year in funding over five years if it could secure £3m annually from other businesses in the area, but the NRF said this was not a viable option and it would have to close.
Osborne yesterday pledged £1m annual funding for four years for the new Virgin Money Foundation, with the money coming from fines levied on banks involved in the Libor-rigging scandal.
Virgin Money has pledged to provide £1m in funding for 2015; a spokesman for the bank said it hoped that would increase. "Contributions in the future are going to be determined by the performance of the bank, but we hope to be able to make increasing contributions," he said.
The VMF will initially focus solely on north-east England, but will take on a wider remit at an unspecified time in the future. "Certainly, 2015 would be north east-focused, but it would be unfair to put any timeframe on it," the spokesman said. The foundation was yet to register with the Charity Commission but would become fully operational during the first half of 2015, the spokesman said.
The NRF employs 12 people, according to its last available accounts. It is in the process of spending its last remaining funds, but it is not known whether any assets, resources or staff will transfer to the VMF. The Virgin Money spokesman said he could not comment on this matter. Third Sector called the office of the NRF, but was told that staff were "not really allowed to say anything" and was given the number of a PR company, which was unable to comment before publication of this story.
Other Libor fines donated to charities and good causes this year have been put towards a number of uses, including buying new helicopters for air ambulance charities, helping emergency services personnel charities and refunding VAT on the sale of 888,246 ceramic poppies used in the First World War memorial at the Tower of London.