MPs said last night that good causes would suffer a devastating blow after it was confirmed the biggest charity in the North-East was to be wound down.

Talks between the Northern Rock Foundation and potential backers have been unable to find the £3m-a-year to support its charitable funding.

Virgin Money took over Northern Rock in the wake of the banking crash, and inherited responsibility for the foundation, which has handed out more than £200m to good causes over the past 17 year.

In May, the Newcastle-based bank said it was willing to invest £1m-a-year via the foundation as long as other North-East companies made up the £3m annual shortfall.

At the time, Virgin boss Sir Richard Branson issued a blunt message for foundation bosses to “get of their a*** and prove themselves.”

Yesterday, the foundation said it was “with deep regret” it would close its programmes at the end of 2014 and prepare for closure.

Virgin will honour its pledge with an initial charitable investment of £1m in 2015 to help young people in the North-East.

Kevan Jones, Labour MP for North Durham, said the offer was “a paltry sum, when compared to the salaries paid to Virgin executives.”

He added: “Virgin Money and Sir Richard Branson should hang their heads in shame.

“This will be totally devastating for community causes across the North-East. It is a betrayal of the commitments made by the government that the foundation would be safeguarded when Virgin took over Northern Rock.”

Jayne-Anne Gadhia, Virgin Money chief executive said: “We are serious about our commitment to the North-East community and today’s announcement will see us invest in the future of young people in the region.”