THE charity set up by Northern Rock before the bank’s spectacular collapse will pay for a team of debt counsellors to help those hit hardest by recession.

The Northern Rock Foundation yesterday announced a £1.5m grant to fund 12 counsellors, offering face-to-face advice, along with three telephone advisors, to help people struggling to make ends meet.

The money will go to the Citizens Advice Bureau (CAB), which has reported a big increase in the number of people turning to it for help in recent months.

The funding will mean it can help up to 8,000 people over the next two years across the North- East and Cumbria.

The foundation was set up in 1997 as an independent charitable section of the Newcastle-based bank, which collapsed in 2007 at the beginning of the recession.

At the time, the Government stepped in to nationalise it, the bank had an estimated £100bn of debts.

Only 12 months later, Northern Rock was criticised by debt charity Credit Action for its “aggressive”

approach to repossessing the properties of homebuyers who had found themselves in arrears.

The grant announced yesterday is the first to be made under the Northern Rock Foundation’s new Managing Money programme.

Foundation chief executive Penny Wilkinson said: “January is a particularly difficult time of year for people with debt problems and in the current financial climate we know that there will be a lot of families in the North-East and Cumbria struggling to make ends meet.

“Our new programme will enable people to get help and advice quickly, giving a practical response to the rising debt problem in our region.”

Allyson Whisker, partnership development manager with the CAB, said: “The recession has had a big impact in the North-East and Cumbria, and we have seen a sharp increase in the demand for advice on debt and other related issues.

“The money provided by Northern Rock Foundation is a lifeline that will allow us to reach more people and provide them with practical and personal advice for getting out of debt.”