THE Government will put £4m-worth of fines extracted from misbehaving banks into a new North-East charitable foundation, the chancellor announced today (Thursday, December 11).

During a visit to a Virgin Money branch in Stockton, George Osborne unveiled £4m of state funding for the new Virgin Money Foundation (VMF), adding to £1m Sir Richard Branson’s bank promised for North-East community projects in September.

The announcement came as the Northern Rock Foundation (NRF), the North-East’s biggest charity – the closure of which was inevitable after talks with Virgin Money, its sole founder, collapsed this spring – made its last grants, taking its total giving since 1998 to £223m.

Mr Osborne said the NRF had made a “considerable impact” in the North-East in recent years, but blamed its demise on the deal made when the Newcastle-based bank collapsed in 2008.

“It is only right that we use the fines from those who’ve demonstrated the worst values to support the charitable causes in the North-East that demonstrate the best of British values on a daily basis,” the chancellor said.

Among the first causes to benefit will be the region’s first Youth Zone and the Community Foundation for Tyne and Wear and Northumberland.

Jayne-Anne Gadhia, chief executive officer of Virgin Money, said: “Virgin Money takes its social responsibilities very seriously in all of the communities in which it operates – but particularly here in the North-East.”

Further details of VMF are expected next year.

Jo Curry, chief executive of Voluntary Organisations’ Network North East, said: “Following the loss of NRF and the cuts in the public sector funding this will bring good cheer to North-East charities.”

Meanwhile, NRF gave its last £702,700 to 13 organisations, bringing its total giving this year to £6.7m.

The biggest beneficiary is Northern Money, a consortium of the region’s credit unions.

NRF chairman Alastair Balls said: “NRF has been an exemplary institution, which has been a force for good and of which people across the North-East and Cumbria have been justly proud.”

The NRF’s final act will be a series of special awards and projects, to be announced early next year.

Yesterday (Wednesday, December 10), the High Court ordered Northern Rock Asset Management, the nationalised “bad bank” remains of Northern Rock, to refund some £261m of interest payments to 43,000 borrowers over a wording glitch in loan documents.