2,000 Northern Rock jobs to go

Mar 18 2008 by Adrian Pearson, The Journal

NORTHERN Rock will today announce plans to make a third of its workforce redundant. At least 2,000 staff will be axed over the next three years as the bank changes to conform with European Union rules on state aid.

A rapid response unit has been set up tasked with finding employment for the workforce as quickly as possible.

The Treasury has asked regional development agency boss Alan Clarke to head up the unit, working alongside a variety of Government bodies including Jobcentre Plus and the Learning and Skills Council.

Ron Sandler, appointed executive chairman at the Rock after it was nationalised last month, will today announce measures to “slim down” the bank as part of a business plan submitted to the Treasury. The plan has to comply with strict European competition rules which prevent the Government giving one business an unfair advantage.

Treasury sources last night said the Chancellor had been anxious to avoid mass redundancies and stressed the jobs would be phased out over three years with “a lot of Government support in place”.

It was unclear last night whether the job losses to be announced would include the several hundred a year already planned to go through natural wastage.

If, as was initially indicated by Treasury sources, Northern Rock continues with a recruitment freeze and sheds a third of the workforce, the bank could see more than 3,000 positions lost by 2011.

It is believed the Northern Rock Foundation will keep funding of £15m per year in 2008, 2009 and 2010 promised by the Chancellor when he nationalised the bank.

Yesterday afternoon Newcastle North MP Doug Henderson, whose constituency is home to Northern Rock’s headquarters, revealed he would be meeting Mr Sandler “shortly” for a general discussion about the business plan.

“He knows and I think he agrees and we all want to save as many jobs as we can and it is a matter of keeping up the pressure with Northern Rock to come up with the best business plan possible from the workers’ point of view and to persuade the European Commission that it is a proposal that should be supported as an interim measure to get the company back on the road again,” said the Labour MP.

Union leaders are already preparing to meet with bank bosses. Unite regional secretary Davey Hall said the bank’s executive chairman was “more concerned about pleasing the Government than looking after the work force”.

Mr Hall said: “He [Mr Sandler] is doing the Government’s dirty work through his decision to make a third of the workforce redundant.”

The European Commission said it would study the proposals carefully once it received them, but declined to set a date for a decision.

The Chancellor will today address the House of Commons with further details on the banks future under EU funding rules.

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