Government rejects latest proposal to plough proceeds from Northern Rock sell-off into North East charities
As featured in the Evening Chronicle on 11th September and on 4th December, Newcastle City Council is the latest organisation to write to the Treasury to ask them to consider channelling a proportion of the profits made on Northern Rock assets into the charity sector of the North East. As with previous attempts, the Government has rejected the proposal.
In the letter to the Chancellor Philip Hammond, sent on the 10th anniversary of the demise of Northern Rock bank, Cllr Nick Forbes, Leader of Newcastle City Council said:
“I am calling on you to honour the principle that 5% of Northern Rock profits are invested in North East communities, and to set aside 5% of the overall profit on Government’s investment in Northern Rock for the benefit of communities in Newcastle and the North East.
“Northern Rock invested this share of its profit into good causes locally because of a belief that our region should be empowered to help those less fortunate.
“The charities which benefited from this sense of regional pride did nothing to contribute to the bank’s fall, but have suffered ever since.
“Now is the time to correct that, and I would be happy to meet to discuss how this might work in practice.”
On the 4th December the Chronicle reported that the Government had responded to say 'the money needs to be ploughed back into recouping the £136.6bn bill UK taxpayers were left with after the financial sector bailouts.'
Cllr Forbes slammed the decision, saying:
“It’s frustrating to see the government overlook not just the needs of charity organisations in the North East, but also our region’s heritage.
“The Chancellor will know that the North East and its charities have a moral and potentially legal claim to any profit the government makes from its nationalisation of Northern Rock.
“By refusing even to consider such an approach, this government is denying charities here the chance to set up a new legacy fund to help good causes for generations to come.”
Previously VONNE has highlighted the impact of the demise Northern Rock Foundation in this blog from September 2017, excerpts below:
VONNE's understanding is that since 2012 the continuing sales of parts of the NRAM portfolio have amounted to the Government loan to bail out Northern Rock being fully paid back to the Treasury. Experts predict that the remaining portfolio will generate a profit of between £8-11 billion over the next 10-15 years.
There is a strong moral case that 5% of this profit should now be made available to support the VCSE in the NE and Cumbria. 5% of £11billion is £550m. If this were placed in an endowment at 6% return it would create a grants pot of £33m per year – forever.
The losers here are charities and community groups in the North East and Cumbria and the vulnerable individuals and communities they support. These organisations, following several years of austerity, public sector cuts and increasing demand for their services, are facing increasing financial pressures.
In 2014 VONNE wrote to the Treasury and the Charity Minister requesting such a pledge, with a hint of a wider public campaign if we didn’t see anything by the Autumn statement. The moral case for the government making a pledge to give 5% of pre-tax profits to a sustainable grant-making body was also made by others, including the Bishop of Durham and Lord Shipley, but with no discernible response.