Northern Rock cuts grants by two thirds

The Northern Rock Foundation has decided to close four of its funding programmes and scale down its 2008 grants budget to just £7m - a third of this year's expenditure. The move comes as uncertainty about the future of its parent company continues.

The 2007 projected budget of £30m was cut to £22m after the Northern Rock bank applied for emergency loans from the Bank of England in September. The foundation committed £27m to new grants in 2006.

A spokesman for the foundation, which receives 5 per cent of the bank’s annual pre-tax profits, said next year’s budget was based on how much trustees were prepared to commit from the foundation’s reserves.

“It is very cautious,” he said. “We don’t have any definite information about our income from the plc, but if the situation is resolved we can look again at the figures. It is better to start at a low point and maybe be able to increase it.”

The foundation has also decided to axe its programmes in Money and Jobs, Strong and Healthy Communities, Culture and Heritage and Better Buildings. It will concentrate funding on its Safety and Justice, Building Positive Lives and Independence and Choice programmes.

The spokesman said the decision was based on a policy of making fewer, better grants, rather than giving smaller grants across the board. He said the axed programmes might be resurrected if the bank’s situation were resolved and the foundation’s trustees were confident that they could “invest substantially and effectively”.

He emphasised that the foundation would be able to meet all of its existing commitments.

A statement on the foundation’s website said: “At £7m, our investment for 2008 will still be one of the bigger grant-making budgets in the country.”

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