workplace

Employment Issues

Key Statistics	2003	2004	2005
% growth in jobs	10%*	23%*	13.3%*
% of women in managerial and executive positions	52%*	57%*	54%*
% of female staff	66%	66%	61%
% of managerial grade employees from ethnic minorities	1.6%	2.2%	2.3%
% of workforce from ethnic minorities	2.0%	1.8%	1.9%
% of staff disabled	4.0%	4.0%	4.0%
% of staff turnover			16.9%
% of staff on temporary contracts			1.9%
Staff Headcount	4225	5151	5836
* net figure including impact of branch closures

Strategy
Northern Rock's strategic objective of achieving annual growth is proving tremendously successful. The workforce is seen as fundamental to the continued success of the company, with staff figures reflecting the growth experienced elsewhere in the business.

Employee Contribution

Employment Figures 2001-2005 Graph

All Company employees are regarded as partners in the business we recognise the distinctive contribution that each person makes to the success of the business. All employee objectives are linked to the organisations Key Business Goals, which enables the Company to achieve its strategic vision. The Company endeavours to engineer a collective vision through all areas of employee life, at induction the collective vision and the employee's role in achieving this is illustrated. The key role employee's play is carried through an internal communication, which regularly provides updates on performance and achievement of Company strategies.

Northern Rock is fully committed to providing a working environment, which is of benefit to both the organisation and employees alike. Vigilance is maintained in ensuring that the Company works within the legislative and regulatory framework, which relates to its business policies and procedures which are continually monitored to ensure that staff are treated fairly.

Recruitment People Strategy
The Company's People Strategy has been devised to ensure that business operations are fully supported by recruiting, training and developing quality staff.

The Company's "People Plan" which delivers the strategy, has been devised to ensure that business operations are fully supported by recruiting quality staff, by developing innovative recruitment channels to ensure access for all sectors of the community and ensure diversity within our workforce. The plan also addresses retention issues, training, education and development.

Communicating Northern Rock's policies and practices to staff is also very important. The "People Plan" developments are actively communicated through internal magazines, PowerPoint presentations, Intranet and e-mail which are cascaded to staff at every level throughout the Company.

With the aim of attracting quality staff, Northern Rock's Northern Rock website has recently been reviewed and improvements made to ensure that information was accessible and informative as possible.

Equality, Diversity and Community Issues
As an organisation Northern Rock continues to be committed to ensuring that equality exists across all aspects of working life.

In addition, the Company wants diversity to exist throughout our workforce, in the knowledge this will give Northern Rock a competitive edge in meeting the demands of its broad customer base. To support this, a framework has been developed to support Northern Rock's policies and ensure good practices prevails within the organisation.

The Company is continually seeking ways to improve its policy and practice by updating its skills and networking with relevant groups for advice and guidance.

Northern Rock's ongoing training and management development programmes ensure that equality and diversity issues and its responsibilities under legislation are met. Through seminars and workshops Northern Rock has raised the profile of equality and diversity to enable its staff to develop good practice in all aspects of dealing with people.

Opportunities
Northern Rock continually reviews its policies and procedures to ensure that staff are offered every opportunity to develop their role and personal development within the company. A Training Skills Shop and Job Shop to ensure career development and internal movement.

Equality

Disability
As a company Northern Rock has found positive benefits in working with various organisations support the rehabilitation of disabled people. Continuous good practice as a Disability Symbol Holder, and strong links with community partnerships, has helped us increase the number of disabled employees.

Gender Equality
Northern Rock is a member of Opportunity Now, an organisation which looks at ways to improve gender equality in the workplace. Each year the Company undertake a bench marking exercise which enables us to measure ourselves against other organisations. This ensures that Northern Rock do not lose sight of Company goals and identifies key trends and examples of best practice towards gender equality and gender diversity.

Over 54% of staff in Senior Management positions are female. This figure has increased year on year and shows an increase of over 50% in comparison to 1997. Over 61% of the workforce are female some of which benefit from flexible working hours which allow them to still play a major role in bringing up their families. The following graph shows how Northern Rock has have achieved a balanced workforce throughout the different grading structure.

Employment Figures 2001-2005 Graph

Pay Scheme
Following an equal pay audit to ensure equality in our pay systems, a job assessment review was carried out which resulted in a robust pay system. Northern Rock work with Opportunity Now and the Equal Opportunies Commission to keep this area as a constant focus.

Racial Equality
In 2002 Northern Rock also joined Race for Opportunity which is a similar campaign to Opportunity Now but concentrates on race. This Race for Opportunity gives us the opportunity to benchmark against other organisations to identify gaps and weaknesses and supports the Company in developing and improving ethnicity in its workforce.

Stonewall Corporate Equality Index 2006
During 2005, Northern Rock completed the Stonewall Corporate Equality Index for the first time.

Stonewall was founded in 1989 by women and men who had been active in the struggle against Section 28 of the Local Government Act. Their aim was to create a professional lobbying group that would prevent such attacks on lesbians, gay men and bisexuals ever occurring again and to put the case for equality on the mainstream political agenda by winning support within all the political parties.

They promote new research (for example on discrimination in the work place, homophobic violence & sex education) and have taken legal test cases that graphically challenge inequality (e.g. on the age of consent and lesbians & gays in the armed forces.)

More recently Stonewall’s work has involved partnerships with organisations outside Parliament to ensure that the rights and needs of lesbians, gay men and bisexuals are addressed in the wider community.

Diversity
Direct links have been established with several recruitment agencies and central employment services to provide a more diverse workforce, in particular “At Work” which is an agency that works to attract BME (Black, Minority, Ethnic) staff and lone parents.

Age Positive
With the acknowledgement of an ageing society and the move towards age discrimination legislation, Northern Rock is committed to encouraging applicants from all parts of society and in all age groups.

In 2004 Northern Rock launched an age diversity campaign to encourage more applicants over the age of 50 years, and this has continued into 2005

This campaign is ongoing with the overall target to increase over 50s in our own workforce.

Northern Rock has been granted the Age Positive Award 2005 and have been selected as an Employer Champion. This provides government recognition for Northern Rock’s exemplary approach in establishing best practice relating to age. To access case study follow link: http://www.agepositive.gov.uk/researchdetail.cfm?sectionID=42&cid=122

As part of the organisation’s ongoing development there is an Age Positive Group that meets regularly to discuss issues and continue our pro-active approach. Part of the work of the group is to review policy and procedure, providing staff with an opportunity to shape the working environment for the future.

Work-Life Balance
As a supportive employer the Company has a range of Family Friendly Policies including:

Career Breaks

JobShare

Condensed Working Days / Weeks,

Study Leave

and many more.

Flexible Working
Northern Rock and AMICUS are committed to producing flexible working within the workplace and to this end a flexible working policy has existed in Head Office for some time.

Northern Rock is delighted to announce that this has now been extended to all remote areas of the business.

It is recognised that this may not operate to the same extent of Head Office functions but the aim of the policy is to allow employees in remote areas some discretion on start/finish times, lunches or taking time out during the day to attend appointments etc., subject to the needs of the business.

To further develop the flexible-working theme, more use is being made of the Intranet. The development allows employees the opportunity of undertaking training or developing their knowledge at their place of work without unnecessary travel to training venues for overnight accommodation away from home.

Sickness Management
Extensive work has been undertaken by the Company during 2005 to manage sickness absence.

A dedicated Absence Team now manages all aspects of sickness. The centralised process has reduced the overlap and duplication of admin and enables one area to identify specific issues.

Our internal management course "Leading a Team" incorporates a detailed section on sickness management and this will be delivered to all existing team leaders . The Absence Management course within the Management Development Programme delivers concise information to managers graded M3 - M7 regarding sickness procedures and advice on how to deal with all types of absence.

The launch of the Occupational Health Service in October 2005 provides a service for all managers to receive medical feedback regarding underlying issues with staff members. This feedback contributes to the ongoing management of staff and enables the company to provide support where appropriate.

The Employee Assistance Programme (EAP) launched in December 2005 offers free, confidential counselling and advice for all staff. This service is communicated to all staff who see the Occupational Health Nurse and by managers in return to work interviews. Management discretion can also be used to make referrals to the EAP, where appropriate.

The Absence Team liase closely with the Diversity Manager to ensure that staff with disabilities highlighted through sickness absence and/or referral processes, are identified as soon as possible to ensure appropriate intervention.

The Absence Team produces a monthly report highlighting staff with 4 or more periods of absence within the last 6 calendar months. This report is forwarded to Operational Directors for investigation within the line. The report acts as a trigger point for appropriate action. Personnel receive feedback on any action taken.

Sickness reporting procedures have been reviewed and are to be communicated within the line. This update will include an updated Electronic Sickness Form and Return to Work Interview sheet with Managers Guide. There will also be an Employee Declaration requiring confirmation that the staff member followed the correct absence procedures. This will ensure that the paperwork used for sickness absence is consistent across the company. The sickness policy has been reviewed and will be included on the Intranet and Procedures Guide as soon as the People Management focus for 2006 has been incorporated and agreed by the union.

Please see further information in Health and Safety Section

Employee Support Groups
In 2002 an Equality and Diversity Panel was established to help minimise any barriers between employees, enhance understanding and to help shape policy and practice. As the staffing levels have increased so has group membership. In 2004 the panel split to form smaller focus groups to ensure all needs were being met:

The groups have board backing and consist of volunteers who are directly affected or interested in the following:

Age Positive
Disability Hearing - aim of which is to make communication accessible with D/ deaf/ hard of hearing employees.
Disability Visual - addressing real issues for visually impaired staff.
Disability Physical and Cognitive Support - reviewing disability and health issues affecting staff.
Race and Ethnicity - understanding different racial and cultural backgrounds.
Religion and Beliefs – (including people with no faith).
Sexual Orientation.
Work Life Balance
Race and Ethnicity.

They all operate under the brand of 'Make Me Matter', and will help Northern Rock to continuously develop.

One key achievement for the group was establishing a Contemplation Room on site which members of staff can use to pray or reflect.

Community Issues
Northern Rock is committed to a diverse workforce that reflects the local community and continually strives to improve accessibility to its recruitment and selection process in light of demographic changes.

Work has also been carried out with Refugee Groups in preparing them for the workplace through training and placements. This has been supported through the Northern Rock Foundation and helps Refugees to return to paid employment.

Northern Rock continue to participate in an initiative called 'Common Purpose'. The purpose of this is to help people in leadership and decision making positions to be more effective: in their own organisations, in the community and in society as a whole.

Participants have the opportunity to take part in specialised programmes, which brings together leaders from all sections of society, to tackle issues with the people who carry real life responsibilities with them. This approach doubles the return on investment resulting in better leaders and stronger communities by developing links with other organisations.

A number of initiatives have been introduced, some of which target school pupils and college students.

Formal Contacts with various Educational Business Partnerships. Such as projects helping primary school children with a design task and providing interview skills practice for years 11 to 13. The Company is a member of an Employer Forum, organised by Newcastle College, which meets half yearly.

Informal partnerships with colleges of secondary and further education, including work experience, which remains one of the major ways the company, can help. Requests have also been received from many of the local schools requesting talks on how to prepare for university entrance and an HR overview, for those taking this module as part of their studies.

Human rights awareness - outsourced functions
see also Business Ethics and Human Rights.

Our Head Office Security Staff employed by St. James Security receive a human rights awareness briefing as part of their training.

Chubb Wardens confirm: "Under the umbrella of the Emergency Response Training Package different topics are covered including: Data Protection Act, Equal Opportunities and Health and Safety. In the Staff Handbook which everyone receives, the rights of the Employee are clearly outlined for each new Employee.

It is Chubb policy that making an arrest is a last resort only - in this event Police and Criminal Evidence (PACE) guidelines are strictly adhered to. Officers involved with Retail work, attend a Conflict Management Course that includes both the theory and practical elements of Restraint Techniques where they should prove necessary.

"A Security Officer has no more power than any other citizen where arrest is concerned - and Police will deal with any arrest situation wherever possible. The Security Officer will always summon the Police for assistance where a break-in is confirmed".

AMICUS
A union - AMICUS is the recognised union as the representative and negotiating body on behalf of graded staff on matters relating to salaries, hours of work, holidays etc. Many members of staff are also union representatives and receive full backing from the Company to attend training courses etc. The input received from employees, managers and trade union representatives is recognised as vital in helping professional's employed in the Personnel function to monitor and implement organisational practices.

Trade Union membership is estimated at circa 50% of graded staff, however these figures are not collated by Northern Rock as membership is considered private to the individual.

During 2005 AMICUS, including staff representatives, continued to hold open days within Head Office at Gosforth and Sunderland sites. Northern Rock made rooms available for staff to talk to the union representatives first hand.

Strengthening the partnership approach with Northern Rock and Amicus takes to industrial relations, the first full-time union representative in Northern Rock, was appointed by Amicus in May 2005. Based in Head Office site at Gosforth, the representative is the main point of contact for Amicus members in Northern Rock and is available to:

Be a source of information on union membership and benefits
Provide a vehicle for feedback to an from members on any industrial relations issues on-going in the Company, liasing with the network of local workplace representatives
Assist individual members with problems at work

The maintenance of good staff relations is very important and the Company will try to ensure that all employees are treated fairly. To this end a grievance procedure and disciplinary procedure are in place, both of which have been agreed with the union. All staff have access to the policies and have the right to union representation at all stages.

In agreement with AMICUS a Conduct at Work Policy was introduced in 2004 and issued to all existing staff. New staff receive a copy on commencement of employment. The policy outlines how staff should behave and encourages employees to treat each other with respect and dignity.

Staff Concessions

Maternity Policy - Northern Rock operates an extensive maternity policy, which goes beyond minimum requirements, including paternity arrangements and paid time off to attend antenatal appointments.
Career Break - As an equal opportunities employer, Northern Rock operates a career break policy for staff who wish to leave for a maximum of 5 years due to genuine domestic reasons e.g. maternity or adoption leave, care of relatives or relevant full time education courses.

Alternatively,

staff can take Parental Leave or time off to care for dependants in the instance that a dependant falls ill or the unexpected termination or disruption for the care of a dependant or for an incident which involves a child of an employee whilst in the care of an education body.
staff travel - Northern Rock operate a scheme whereby funds are available for staff to purchase a season ticket which offers a good discount on travel passes.
staff discounts - a list of discounts that staff can benefit from are available on the 'Pink' communication site on the Intranet site.

Permanent Health Insurance Plan
This benefit is available to active members of the Company Pension Scheme. The Company provides permanent health insurance benefit through Scottish Equitable. The policy provides a payment of up to 75% of basic salary less the Statutory Sickness Benefit which may be payable by the DSS.

Entitlement to benefit is not an automatic right and is subject to objective medical evidence.

Employee Assistance Programme
Northern Rock were delighted to announce in 2005, the introduction of a brand new benefit for all Northern Rock staff AND all members of their household. With effect from 1st December Northern Rock introduced an Employee Assistance Programme designed to provide free professional help and support for our employees and their families in times of need.

The service is available 24 hours a day, 365 days a year and all advice, help and support is given in complete confidence. Expert counsellors and advisers are always available to assist with virtually every type of problem including:
Information and help in regard to illnesses, treatments and medications:
- Specialist Clinic advice on Pills and Prescriptions
- Travel Clinic
- Healthy Living Clinic
- Men’s Health Clinic
- Women’s Health Clinic
Specially trained counsellors in:
- Marital and relationship difficulties
- Emotional problems
- Anxiety and depression
- Bullying and harassment
- Pressures at work
- Medical matters
- Financial worries
- Housing problems
- Legal concerns
Family Care:
- Childcare, maternity and young peoples health
- Eldercare and older peoples health

Assistance can even involve referral to a qualified Counsellor for face to face counselling if this is needed. All of this help is available to our staff and their family members via a freephone number.

Entertainment Association
The Entertainment's Association is run by an elected committee of members and provides a variety of social and recreational activities for all staff. The Company makes an annual payment towards the Association's finances based on the number of members.

Shareholder Relations and Staff Shareholding
The Shareholder Relations Department provides a pivotal link with the Company's registrars and Capita Registrars.

Employee Shareholder Benefits
Northern Rock has an established policy to involve employees as financial stakeholders in the Company.

Employment Figures 2001-2005 Graph

Share Scheme Award – All Employee Share Plans
Northern Rock were recognised in 2005 for our commitment to employee share plans. Northern Rock received the award for the most effective all employee share scheme strategy.

The judges comments recognised the corporate commitment and input to the schemes:

“The judges awarded this entry the top place in this category for a number reasons: the high levels of staff which held on to shares after maturation; the strong employer brand which ran through the communication strategy; the financial education programme and the strong backing from its board of directors that this scheme received.

Share incentives are a key part of the reward package at Northern Rock, so staff are offered a range of schemes, each with a high take up rate. Following a change of share plan administrators in February 2004 Northern Rock took the opportunity to relook at its communication material and come up with something new. Using its position as sponsor of Newcastle Falcons Rugby Club it had access to pictures of England’s World Cup kicking hero Johnny Wilkinson (a sporting hero that a staff survey demonstrated employees identified with). Using Wilkinson on the front cover along with the strapline “Be a winner…” the bank linked the share scheme with success in the minds of staff.

Participants in the SIP scheme launched in April 2004 went up by 40% compared to the number of participants previously. Under the approved profit sharing scheme (a fore runner to the share incentive plan) 70% of staff opted for shares over a cash bonus – at the time of submission 72.10% of staff were planning to hold on to their shares rather than sell them immediately (the final release was in April 2005).

As many as 60% of staff take part in at least one of the sharesave schemes and the bank has introduced a comprehensive financial education programme to help staff deal with capital gains tax and other queries.

In all over 80% of Northern Rock staff participate in one share plan of another”.

Share Scheme Award – 13 th Annual ifs ProShare Awards 2005
Most Effective Communication of an Employee Share Plan 1,1001 – 10, 000 Employees

Employment Figures 2001-2005 Graph

The ifs ProShare Awards recognise companies that demonstrate best practice through their annual reports, websites, employee share plans and financial eduction programmes, recognising their responsibility to shareholders and employees and to create the opportunity for a more financially literate population.

In the judging report it was stated that ”Northern Rock appealed to the judges with their straightforward, sports-based campaign that tied in closely with company sponsorships. The panel emphasised the exceptional quality of information provided to employees. Our staff questionnaire “asked all the right questions” and “employee feedback was taken into account.”

Summary of Shareholder Relations
An overview of Employee Share Plans

Approved Profit Share Scheme
Share Incentive Plan
Employee Share Option Scheme
Sharesave

Employee Share Plans
Approved Profit Sharing Scheme (APSS)
The Northern Rock Approved Profit Sharing Scheme was originally launched on 18 December 1998 and there have been a further four issues since in April 1999, 2000, 2001 and finally in 2002. All of these awards except the final award have matured. The final maturity was due on 15 April 2005, details as below:

Date	Locked In Value	No. of Participants	Total Shares
15/04/2002	£6.65	2,154	371,904
31/01/2005	£6.65	2,072	361,832

Share Incentive Plan (SIP)
The Northern Rock Share Incentive Plan was first launched on 14 April 2003 replacing APSS and a second award was granted on 13 April 2004. The third grant date was 13 April 2005. All Northern Rock employees who have been continuously employed for a period of 6 months prior to the appropriation date are invited to participate in the Plan. The Plan allows staff to receive a bonus of up to 5% of your salary paid in free shares in the Company. Details of the two existing grants are as below:

SIP1	Date	Locked In Value	No. of Participants	Total Shares
	14/04/2003	£7.11	2,042	239,855
	31/01/2005	£7.11	1,691	207,138

SIP2	Date	Locked In Value	No. of Participants	Total Shares
	13/04/2004	£7.66	2,246	238,488
	31/01/2005	£7.66	2,112	227,776

Sharesave Scheme
The Northern Rock Sharesave Scheme was originally launched on 1 January 1998 at an Option Price of £3.81 per share, followed by a second Grant of Options on 1 May 2000 at an Option Price of £2.15, a third Grant of Options on 1 May 2003 at an Option Price of £5.98 and a fourth Grant of Options will take place on 1 May 2005 at an Option Price of £7.27

Qualifying employees were invited to sign a savings contract to make regular monthly payments ranging from £5 to £250 from their salary over a period of three, five and seven years. Details of the existing grants yet to mature are as follows:

2000	Date	Option Price	No. of Participants	Total Shares
5 Year	01/05/2000	£2.15	286	1,028,464
	31/01/2005		240	905,426
7 Year	01/05/2000		149	494,128
	31/01/2005		127	435,293

2003	Date	Option Price	No. of Participants	Total Shares
3 Year	01/05/2003	£5.98	1260	650,238
	31/01/2005		994	547,973
5 Year	01/05/2003		215	188,023
	31/01/2005		183	164,364
7 Year	01/05/2003		144	126,907
	31/01/2005		128	111,895

29% of 6,000 eligible employees are taking part in the latest Grant with 67% over 3years and 33% over 5 years. Details as follows:

2005	Date	Option Price	No. of Participants	Total Shares
3 Year	01/05/2005	£7.27	1,098	373,728
5 Year		£7.27	573	432,594

Employee Share Option Scheme (SOPS)
The Northern Rock Share Option Scheme was first launched on 1 June 1998 when 1250 share options were granted at a price of £6.18 per share. Since then a second Grant of Options was introduced on 19 July 2002 with 1000 share options granted at a price of £6.41 per share. A third Grant of Options was introduced on 27 January 2005 with 4,462 qualifying employees each receiving 1,000 options at a price of £7.73 per share. Details of existing grants as below:

SOPS98	Date	Option Price	No. of Participants	Total Shares
	01/06/1998	£6.18	1,722	2,217,902
	31/01/2005	£6.18	412	540,720

SOPS02	Date	Option Price	No. of Participants	Total Shares
	19/07/2002	£6.41	3,796	3,796,000
	31/01/2005	£6.41	2,968	2,968,000

SOPS05	Date	Option Price	No. of Participants	Total Shares
	27/01/2005	£7.73	4,462	4,462,000

Breakdown of staff participation in Share Incentive Plan and Staff Share Option Schemes:


SIP1/03	= 2042 Participants taking shares
	= 1929 Opting for cash

SIP2/04	= 2236 Participants taking shares
	= 1985 Opting for cash

SS03	= 1619 Participants saving in new scheme

SS03 3 yrs	= 1260
SS03 5 yrs	= 215
SS03 7 yrs	= 144+
Total Participants	= 1619

Training and Development
People focus is a key ingredient of Northern Rock's success - towards its customers, through community activities, other stakeholders and the driving energy behind the Company's business performance; its staff.

The Company operates in a highly competitive market with continuously changing demands. It is therefore essential that the workforce is confident and well motivated. In support of this aim the Company provides comprehensive training and development programmes. These are tailored to the individual's specific needs and in line with business objectives, providing real opportunities for career progression and development. By developing the competencies of its team, Northern Rock achieves increased proficiency, reduced operating costs, improvement in its approach to customer needs and improved business performance.

The Company's training initiatives are supported by a centralised Training function, guiding the corporate training priorities whilst delivering business specific courses through training teams dedicated to particular business operations.

A 'Building Skills' training approach was launched in 2005, with over 30,200 training days delivered during the year. Key stages of an individual's development in their career with Northern Rock are addressed within the framework from new recruit, first line team manager and new manager to senior management and executive level. The skills and knowledge needed by an individual at each stage of development are included in the framework. The framework is available to all staff via the Intranet, its implementation supported via Induction and management training as well as through the Building Skills Shop, opened in July 2005, which is based on a main thoroughfare at the Company’s Head Office at Gosforth. Training representatives manage the shop, providing information and guidance on the education and training opportunities supported by the Company. In addition a programme of joint initiatives with external education providers is in place and promoted through the shop with further development scheduled. In July 2005 the Company also introduced a Learning Centre for staff, a dedicated facility to support study for qualifications or use of Learning Bank material. This is in addition to the dedicated Learning Centre that supports trainees on the Company’s Modern Apprenticeship Scheme.

Within the Training function, the Central Education and Development team manages company-wide training and education needs and resources.

Best practice material and resources are centralised with access supported via the Company's Intranet which hosts the online Learning Bank including information on courses as well as books, DVDs and other materials.

E-Learning
The development of e Learning continues with the delivery and monitoring of induction and regulatory modules companywide. In addition classroom training on new systems and processes is supported by e-Learning.

Induction
As business needs develop the Company's induction programme is continuously evolving. Support is provided via intranet modules, classroom teaching and model office practical sessions. A new approach was introduced in March 2005, based on the practical aspects of a 'Normal Day' to demonstrate how Personnel policies, regulatory requirements and working practices impact on an individual within the workplace. Corporate Social Responsibility is incorporated within our induction programme and first line manager training as an integral part of everyday working life.

Educational Qualifications
All employees have the opportunity of applying for an educational qualification subject to criteria. At the end of 2005 there were over 700 students studying towards a qualification and over 170 more completing a qualification in the year.

Learning and Skills Council
Following a review of the current Learning and Skills Council contract Northern Rock have been granted further provision from August 2005 to August 2006 to deliver 60 more Modern Apprentice Frameworks. The Frameworks consist of an NVQ and Key Skills relevant to the business. A dedicated learning centre has been established to support the further development of this scheme.

CeMAP Training (Certificate in Mortgage Advice and Practice)
The Company offers a comprehensive CeMAP and Lifetime training programme to all staff members either in a CeMAP or Lifetime role or with the potential to be in a CeMAP or Lifetime role.

Central Education and Development offers a comprehensive support programme to all CeMAP students in the form of study guides, revision courses and a registration service.

A CeMAP homepage attached to the Training Intranet site is currently under construction to add extra support to the current students. This will work along side the current revision courses and study guides that are already available.

Customer Services Professional
This popular qualification underpinning customer service standards continues to be offered. Students are offered revision notes and papers to support them through their self-study programme. The recommended study time is 18 months.

NVQ
The NVQ programme is one of the most popular educational programmes within Northern Rock with over 100 staff members currently undertaking a qualification within the programme.

All areas of the business are offered the opportunity to participate in this programme as it covers Administration, Customer Service, Call Handling, Management and Sales.

Management Development
Management development is integral to the future of the organisation. It ensures Northern Rock has the potential within the management team to take on the future challenges and opportunities the growth strategy will continue to bring.

As part of its Building Skills approach Training launched ‘Leading a Team’ in March 2005, a modular programme providing new and existing first line team managers with training in essential skills and knowledge to support them in their role. The modular approach allows a tailored build up of skills relevant to an individual's needs.

The next level of management training, a new Management Development Framework, was launched in September 2005, offering modules on Customer Management, People Management, Process Management, Risk Management and Business Focus.

In addition to Training courses the opportunity for individuals to undertake the Diploma in Management Studies (DMS) at Northumbria University continues. In 2005, 22 members of staff graduated with the qualification and a further 26 commenced the course in September 2005. 18 are currently in their final year.

In May 2005 the year-long Graduate Trainee Scheme was revised and developed into a four-year support framework. 18 trainees were recruited onto the new Graduate Development Programme in October 2005 from over 500 applicants following an assessment centre process. Successful applicants immediately take up real jobs within the organisation in a variety of business areas including Credit, New Loans and Savings operational areas, Sales, Marketing, Treasury, Finance, Group Legal, Group Compliance, Premises, IT and Personnel. Their development is underpinned by a series of programme events including short-term placements within other areas of the business, team events and Executive presentations on the Company's core business areas and strategy.

Fuller Osborn Award
This annual award was established in 1991 to mark Fuller Osborn's contribution to Northern Rock's success during his 29 years as Chief Executive, and his belief in staff and their development and training. The award is judged by 3 criteria: job performance, study and community involvement - with the aim of recognising an individual's excellence in job performance, personal development, academic achievement and a wider contribution in terms of 'out of work' activities.

There is an excellent response to requests for award nominations which shows the significant effort individuals are making in the day-to-day activities as well as outside of working hours.

Employee Achievement Awards
There are 5 achievement awards each year. Staff are asked to nominate colleagues who they think deserve an award. The awards cover:

Education
Sporting Awards
Helping Others
New Starter
Unsung Hero/Heroine.

Nominations can be submitted on line via the Training Intranet site. Each winner is awarded £250 and is also invited to attend a celebratory lunch with our Executive Team.

Focus on Customer Service
Customer service excellence is a major element contributing towards Northern Rock's success and staff development provides a solid foundation for this. 2005 saw the launch of a new IDEAS (Ideas Delivering Excellence And Service) initiative that identifies and rewards members of staff who successfully propose improved systems and/or working practices that raise efficiency and lift the business contact experience of customers.

A Revised Customer Service programme
Following the comprehensive Customer Service review undertaken by Northern Rock in 2004, the initial project team has been replaced by a new Customer Service Function that oversees the steering group and drives initiatives aimed at improving customers’ contact with the company.

CPD (Continuing Professional Development)
The development of our CPD programme continued on a positive footing during 2005. This programme is an integral part of Northern Rock's overall Training & Competency regime and has been conducive to supporting staff across the business in maintaining their financial knowledge.

Central Education and Development continues to act as an intermediary support to the business to ensure that Northern Rock continues to meet with regulation requirements. In 2005 CPD developments were recognised by the award of ACCA Approved Employer status, a key achievement recognising the support provided by the Company to those in an accounting professional role.

Pre-retirement Training
The Company offers staff due for retirement the opportunity for them and their partner to attend a course to help them prepare for this change in their lives.

Resources
The Company offers a well-stocked educational library within Central Education and Development. Any books or materials necessary to complete a course, which are not available from the library, can be purchased subject to terms and conditions.

Health and Safety Management
Northern Rock is committed to fully complying with all UK and European Health and Safety Legislation to ensure all staff work in, and customers visit, a healthy, safe and secure environment applicable to all its business operations.

With an emphasis to maintain and encourage a healthy working environment, the Health and Safety department works closely with all line departments to ensure risks are properly managed. This is achieved by production and implementation of health and safety management system procedures for risks and monitoring of the effectiveness of these procedures.

Structures are in place to ensure that health and safety responsibilities are met and mechanisms exist to monitor and review the health and safety performance of the company. In particular, David Baker, the Deputy Chief Executive is appointed as the Director with responsibility for health and safety. An internal group reviews health and safety performance quarterly and consultative meetings are held with representatives from AMICUS, our staff union, on health and safety matters.

The approach being taken by Northern Rock is consistent with the targets contained in the Health and Safety Commission Strategy 'Revitalising Health and Safety'. This strategy and the approach being taken by Northern Rock has the principal aim of improving health and safety together with increasing corporate responsibility and accountability.

As a company committed to best practice in health and safety management Northern Rock believe that a well-run business is safe, healthy and profitable.

Health and Safety Section
The Health and Safety team comprises of a Health and Safety Manager and 4 Health and Safety Advisors. This structure provides the foundation for the future development of health and safety.

Health and Safety Policy and Structure
The Health and Safety Policy has been produced and endorsed by the Executive Board.

Health and Safety Policy Statement
The following is the Health and Safety Policy Statement for Northern Rock:

Northern Rock is committed to best practice in health and safety management as we believe it is an integral part of a well-run business.

The protection of the health and safety of our own and other people who may come into contact with Northern Rock is vital to the success of our business. Consequently, the responsibility for health and safety rests with management.

Our aim is to eliminate all preventable illnesses, injuries and associated business losses. This will enhance the wellbeing of our staff and our business efficiency, both of which are important for our continued success.

To achieve our aim and continued success, Northern Rock is committed to:

Ensuring clear management responsibilities are defined for high standards of health and safety, integrated with business processes.

Ensuring that an organisational structure exists that supports and monitors effective health and safety management.

Complying with all relevant Health and Safety and associated legislation.
Applying best practice for systematically assessing and managing health and safety risks with legislation defining minimum standards.

Continually improving health and safety by setting objectives, measuring, reviewing and publishing performance.

Recognising the importance and effectiveness of a consultative approach with staff and AMICUS, the recognised trade union, on how risks are controlled and to secure staff contribution to continuous improvement.

Supporting the implementation of the policy by appointing an Executive Director to champion and take lead responsibility for health and safety.

Providing competent advice on health and safety matters and adequate resources for implementation of best practice.

Ensuring premises, work activities and environments are safe.

Requiring business partners and contractors to operate to health and safety standards, which at least match our own.

Reviewing the policy to ensure its continued relevance and benefit.

A structure for management of health and safety has been established and responsibilities have been defined.

Health and Safety Management
A health and safety management system based upon the guidance contained in the British Standard Institution publication OHSAS18001; Occupational Health and Safety Management Systems specification has been developed. This incorporates procedures for management of specific occupational health and safety risks within Northern Rock.

A Health and Safety intranet site exists to provide readily accessible information and guidance.

Health and Safety Policies and Procedures

Home working
A policy has been implemented and all staff working from home have been trained in the relevant procedures to ensure they have a safe working environment at home.

Call Centre Operations
There has been substantial press comment on the problems associated with call centre workers.

The Company's call centre operations have been reviewed and were found to have very satisfactory working conditions overall.

Northern Rock reviewed its call centre operations against the Code of Conduct for Contact Contact Centres within the finance sector produced by the Alliance for Finance

The Alliance for Finance was set up by the trade unions and staff associations in the UK financial services sector. Its principal purpose is to influence the FSA, HM Treasury and the DTI; such that they bear in mind the interests of staff in the decisions they take about the future of the industry. They also seek to engage in dialogue with trade associations and the consumer lobby in order to find areas of common interest.
Health and Safety during Construction
During 2005, significant activity has taken place on construction projects for development of Head Office facilities. As a client procuring construction projects, Northern Rock has established and implemented processes for managing health and safety risks from construction work. The approach taken by Northern Rock is consistent with best practice guidance such as the Respect for People - RfP Code of Good Working Health and Safety Practices
and includes requirements for setting targets for elimination and reduction of risks during construction work. The process has been applied to current projects that have commenced during 2005 including demolition and reconstruction of Head Office buildings.
Contractors
A system has been implemented to evaluate and score the health and safety management performance of contractors employed by Northern Rock. This will assist in ensuring contractors health and safety standards are at least equal to statutory and specific Northern Rock requirements.

During 2005, 27 contractors were evaluated.

Evaluation of contractors health and safety management has continued resulting in an increase to 101 of the number of contractors whose Health and Safety management arrangements have been approved.

To meet the target for 2005 to audit contractors health and safety performance, an audit checklist has been established and used to audit contractors. The findings from audits have been used to agree improvements in health and safety management where required.

One contractor has been removed from the list due to an unacceptable rating.

To meet the target for 2005 to audit contractors health and safety performance, an audit checklist has been established and used to audit contractors. The findings from audits have been used to agree improvements in health and safety management where required.

Audit of contractors will continue during 2006.
Workstation Assessment
A system has been developed to provide all computer workstation users with online training on best practice workstation ergonomics to avoid discomfort and injury. The system incorporates online assessment for evaluation and management of ergonomics issues associated with workstation use.

The system is supported by the training of workstation assessors to undertake follow-up assessments where computer workstation users require this as indicated during completion of assessments. During 2005, 76 workstation assessors have been provided with training and 1250 users have completed workstation assessment.
Management of Occupational Road Risk
Statistics show that for "office based" employers more accidents occur involving employees whilst driving than in the office itself. With a substantial number of staff covering thousands of miles a year, this review is seen as a major project as a number of Northern Rock staff drive as an integral part of their job.

Guidance has been produced and issued to all staff who drive as an integral part of their jobs and actions required for control of risks associated with driving at work. This guidance includes a policy on use of mobile telephones whilst driving in line with legislative requirements.

A programme for training drivers who are considered to be at higher risk due to the extent of driving associated with their job, has been progressed during 2005, with 33 drivers provided with training. This resulted in 4 drivers beingidentified as requiring further training which has now been provided.
Fire Safety
In conjunction with completion of Head Office development, fire evacuation procedures have been revised and communicated to staff. This has been achieved and communicated to staff. via production of a Guide to Fire Procedures Pocket Card issued to staff describing action to take in event of emergency.

Revised procedures have been implemented for management of emergencies and training has been provided to key personnel.

Fire risk assessments have been completed for remote sites and during 2006 this will be completed for all remote sites to coincide with changes in legislative requirements for fire safety.
Manual Handling
Procedures and training programmes have been implemented to manage risks associated with manual handing. These included:

Implementation of an online manual handling training facility for use by staff undertaking low risk manual handling activities.

Provision of specific manual handling training for staff involved in more complex, higher risk manual handling. During 2005, 57 staff have been provided with specific manual handling training.

Accident Reports
There were 84 accidents reported to the Health and Safety Section compared to 86 during 2004 (note 2004 Report content amended). This represents a 2% decrease

In 2005 Northern Rock's accident incidence rate (AIR) was 137 which is better than the national average. This provides an indication of the rate of accidents that have occurred standardised per 100,000 employees. This rate is commonly used for comparison of an organisations accident performance. The latest data available for 2002/3 indicated the national average AIR being 100.5 for office based industries. Ref: National Statistics, Statistics of workplace fatalities and injuries, Office based industries.

Table 1

REPORTED ACCIDENTS 2000/2001/2002/2003/2004

	Accidents Reported	RIDDOR Reportable	Slips/Trips/ Falls	RIDDOR Minor Accidents	RIDDOR AIR*
2000	34	3	N/A	N/A	N/A
2001	53	4	20	29	117
2002	53	5	19	29	128
2003	155 ¹	10	15	75	240
2004	86 ²	4	34	48	77.7
2005	84	8	37	47	137

Footnote
1 Audit of accident books and promotion of reporting resulted in increased value

2 Original 2004 reported as 84, howver 2 accident reports were received in 2005 that related to 2004 accidents

The increase in total accidents reported is attributable to audit of all Accident Books and promotion of reporting requirements during 2003. This has resulted in an accurate indication of every accident reported within Northern Rock. Whilst total number of accidents has increased, there has not been an increase in severity of reported accidents or any particular trend. The fall in 2004 figures can be attributed to a significant increase in targeted Health and Safety activities.

Work Related Sickness
This is defined as absences due to the following categories; backache/backpain, musculoskeletal conditions and stress. Table 2 shows the number of days lost due to each category during 2005.

During the same period employee levels within the Company rose 13%.

Sickness Type	Days Lost 2003	Days Lost 2004	Days Lost 2005
Muscular Skeletal	211.5	528	400
Backache/Back Pains	942.5	1,115	2041
All Stress Absences (anxiety, depression and stress)	678.5	900	4809
Accident Injuries	720	356	13
Total	2,552.5	2,899	7263

Illness/Incident Rate

	2003	2004	2005
Lost time illness rate:	4.8 days pa per person	4.6 days pa per person	5.02 days pa per person
Lost time incident rate:
*Headcount/Riddor reportables100,000**	236.7	77.1	137.0
Benchmark Office Based Industries ¹	121.3	173.4	162.2

1 Rates of non fatal injury to employees in Business and Finance Industry Sectors, Source HSE Statistics

Corporate Health and Safety Performance (CHASPI)

The final version of the Corporate Health and Saftey Performance Index(CHASPI) was launched summer 2005. Corporate Health and Safety Performance Index (CHASPI) is an online index that enables companies to examine their own health and safety management arrangements and enables stakeholders to view the information and compare with other companies.

CHASPI can be accessed by clicking this link.

Employee Consultation on Health and Safety
Regular quarterly forums have taken place to consult trade union appointed health and safety representatives on progress.

Employee Health and Disability
Procedures were introduced to evaluate new employees health and assist new and existing employees with disabilities.

Medical details of 143 new employees are referred to Health and Safety for evaluation of health conditions identified at commencement of employment. Follow ups include referrals to a physiotherapist or the company doctor based on criteria established by the Health and Safety Section for detailed evaluation and identification support required. During 2005 94 employees have been referred to the Company doctor for further support.

Training initiatives included:

Awareness training for staff working with people who suffer from epilepsy.

Deaf awareness training to provide those working with deaf people basic sign language skills.

Employee Rehabilitation and Physiotherapy
The 2005 target to complete a trial of referral of employees to physiotherapy was successfully completed. The outcome was the implementation of on-site physiotherapy services provided by external physiotherapists.

The implementation of this service enables referral and rehabilitation of staff who have musculoskeletal conditions that affect their ability to work comfortably. This approach of providing rehabilitation to staff is consistent with the aims of Northern Rock Health and Safety Policy and national initiatives contained in the Revitalising Health and Safety Strategy

During 2005, 107 employees were referred to the physiotherapy service. The outcome of referral was that 90% of referred employees musculoskeletal conditions were fully resolved. The overall benefits to individuals are that ability to work comfortably is enhanced and from a corporate perspective this contributes to absence reduction.

In 2006, the on-site physiotherapy service will be introduced within Doxford Park. Since commencement of the service, physiotherapy rehabilitation has been available for staff located at remote sites.

Disability Management and Awareness

Staff with disabilities have been provided with a wide range of assistance to support their ability to work. Examples have included provision of equipment and specialist software.

To enhance the accessibility of Northern Rock branches to disabled customers, care care packs have been produced that contain items such as magnifiers, large grip pens and templates to assist customers with disabilities.

To support the introduction of the customer care packs, a staff-training course was developed and implemented to ensure staff awareness of the correct application and use of the equipment provided in the customer care pack.

Manager Health and Safety Training As part of a corporate management development training programme, a health and safety training module has been produced and delivered. This covers the key points contained in procedures that managers need to know to effectively fulfil their health and safety responsibilities. To enable all managers to be provided with the training, an on-line version of the programme will be issued to all managers during 2006.

Health Awareness

Escape Fitness Suite
The Northern Rock Fitness Suite "Escape" opened during 2003. The fitness programme runs in conjunction with a Health Awareness Campaign being promoted by and within Northern Rock. The Fitness Suite is subsidised by Northern Rock with staff paying £15.50 per month the membership increases daily.

Gym Membership

Date	Staff Number
31 December 2003	652
31 December 2004	870
31 December 2005	938

The Suite has been resourced to ensure staff are encouraged and motivated to use the facilities, including:

Fully Air Conditioned Gymnasium with the latest Fitness equipment.

Regular and diverse class timetable.

Saunas/Sunbeds and Beauty therapy.

Friendly Atmosphere.

Personal Training.

Highly qualified motivated staff.

Free fitness assessments - to work out strengths and weaknesses.

Free fitness programmes - gauged to individual goals.

Adidas goods and products at discounted prices.

Personal Assessments when Joining the Club
A lifestyle profile is offered, with health checks including height, weight, and body composition, blood pressure and lung function tests being undertaken.

The fitness test includes aerobic capacity, flexibility, endurance strength and explosive power. This test is optional and is used as a benchmark for designing an individual client programme.

Every 6 weeks clients are advised to have a reassessment to keep check of their progress. For additional cost cholesterol testing is undertaken as part of a healthy heart programme. This includes a full consultation of the main factors that contribute to coronary heart disease and from the test the biological age can be calculated and appropriate advice provided on healthy eating, weight management and lifestyle changes.

Personal Training
Staff may struggle to reach fitness goals but can be helped by using an Escape personal trainer. The personal training service is unique to the individual and their needs, providing support, guidance and expert knowledge to attain individual goals. The service includes an in depth consultation, a structured training plan and advice on diet & nutrition. Studio Classes are offered on a daily/weekly basis and include:

Spinning.
Body Pump.
Circuits.
Body-sculpt.
Step.
Boxercise.
Fitball.
Aerobics.

Social Events
Not only is joining Escape Fitness beneficial for Health and Fitness but there is also an emphasis on the importance of social events. Activities are arranged by Escape staff and members are encouraged to provide ideas for events.

Programme Events
The first, of a number of, Health Awareness Programme event that took place in 2004 was a Healthy Eating/Slimming programme in January. Healthy eating advice was the top topic selected in an intranet staff survey on health awareness.

The positive eating plan encouraged staff to form permanent healthy eating habits yet, at the same time, enabled them to enjoy all types of food, guilt-free.

As part of Northern Rock's commitment to maintain a healthy workforce, a donation of £5 was paid to the corporate charity for every person who reached his or her target weight over the 5 week programme.