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Volume 451: debated on Tuesday 7 November 2006

Motion made, and Question proposed, That the sitting be now adjourned.—[Tony Cunningham.]

Order. Before I call Anne Snelgrove to discuss Farepak and the voucher-hamper industry, may I point out to hon. Members that the bottom line of the digital clock on the wall is jammed? The time it shows is irrelevant, so if Members keep an eye on the top line, they will see the real time.

The number of Members present shows that there is huge interest in the subject.

I applied for this Adjournment debate on behalf of my constituents whose involvement in the hamper company Farepak, which began trading many years ago in Westleigh in my constituency, has had devastating consequences for them. Some were customers and some were employees. I thank Mr. Speaker for giving me the opportunity to ask the Minister what we can do to give our constituents some kind of Christmas this year, what we should do to ensure that they receive justice and understand what happened at Farepak, and what we must do to ensure that it will never happen again.

The issue affects many of Mr. Speaker’s constituents, and it is the same for many Ministers and Whips, including my hon. Friend the Member for Workington (Tony Cunningham), who has done so much for his constituency. Others have done much for their constituencies, but they cannot speak out today.

I shall just make a little progress.

At least 150,000 people are affected by what has happened at Farepak, and many Members, some of whom wished to attend today but could not do so, have written to me in support of the debate. They include my hon. Friends the Members for Eccles (Ian Stewart), for Dumfries and Galloway (Mr. Brown), for Paisley and Renfrewshire, North (Jim Sheridan) and for Birmingham, Hall Green (Steve McCabe). I am pleased to see so many hon. Members present who are ready to speak for their constituents.

In all our constituencies, families were robbed of their Christmas when the hamper firm Farepak collapsed on Friday 13 October. I remember as a child at Christmas competing for attention with 45 cousins—the other grandchildren of my grandparents. My poor grandparents had to find a present for each of us every year, and amazingly, there were always 45 to 50 presents under their tree. It was some achievement, and companies such as Farepak knew it.

Farepak capitalised on the fear that, without some kind of savings system, Christmas would be a failure, and it is galling to look back on its promotional material now. The brochure featured a mum and her family around the Christmas tree, and it said:

“This year give your family the best Christmas ever”.

To those hon. Members who have asked me why people invested in a voucher company and not in a bank, the message on the brochure is a simple but powerful answer. They were trying to avoid debt, and many had no other place to turn to for a savings scheme that paid out at Christmas.

I congratulate my hon. Friend on securing this debate. Does she agree that given the plight of many families, there is every likelihood that people will turn to loan sharks to try to retrieve their desperate situation?

I agree, and I shall provide some details later about how we may be able to help.

My constituent Vicky Turner, who is a mum of three children, was an agent for Farepak. She lost £4,366, including £840 of her own money, which she had collected from seven customers. She has come to London today, sponsored by my local paper, the Swindon Advertiser, on behalf of the hundreds of Farepak victims, and she wants answers as much as I do.

Credit unions would be a good source of short-term loans. Does my hon. Friend agree with the sentiments of early-day motion 2874? The issue ranges wider than Farepak. Indeed, Halifax Bank of Scotland has a responsibility for what has happened, because it allowed Farepak to continue to trade, even though it was in significant difficulties. HBOS must have known the type of families and individuals who were trying to save with Farepak while it raked in £1 million a week to reduce Farepak’s overdraft. Was not it either cupidity or stupidity on the part of HBOS?

I agree, and I shall address that point a little later.

My constituent and others were told by Farepak that there was no problem with the vouchers and not to worry, when everyone knew that it was all going wrong. On 30 June, the company announced that it would run out of money by the autumn unless funds could be borrowed. That followed the collapse of Choice Gift Vouchers, the voucher company that Farepak used, which led retailers to demand that companies such as Farepak pay for their vouchers up front, when before they had been allowed credit. On 23 August, Halifax Bank of Scotland said that it would lend no more money to Farepak, because the company was beyond saving.

Farepak was a subsidiary of European Home Retail, which included Kleeneze and other companies. An investigation by The Sunday Telegraph into Farepak’s accounts revealed that millions of pounds were regularly transferred between Farepak and European Home Retail. It was said that Farepak money was used to pay off the overdraft with HBOS.

I hope that Halifax Bank of Scotland is tuning into my hon. Friend’s debate, because I have rarely seen Westminster Hall so full. When she said that we must consider what we can do, is not there one culprit in the dock—Halifax Bank of Scotland? It was calling in monies for the overdraft, and those monies were coming from our constituents’ savings. I hope that the Minister will be tough when he replies, and say that HBOS ought to put forward the monies to make good the hard-won savings of our constituents.

Many people, including HBOS, need to answer some serious questions. Although I understand that such transfers are not necessarily illegal, they are certainly unethical, and that is why we need better regulation of the sector. People have written to me to say that the European Home Retail group comprises seasonal companies, so if HBOS had not cut off their funds, they might have made it through to Christmas. There is a question mark over the way in which the bank has behaved, and my right hon. Friend is right to look into it. I thank him for his work.

I congratulate my hon. Friend on securing this important debate. Is she aware that this morning, the media announced that Sainsbury’s will accept Farepak vouchers? If that is true, will she join me in paying tribute to the Minister’s work in calling for the large companies to do so, and ask him to go further and call for the other large companies to accept Farepak vouchers, too?

I agree, and I congratulate the Minister on his work on the situation. Sainsbury’s has said that it will accept up to 25 per cent. of the value of the vouchers, and Tesco has also announced a scheme. I challenge other companies such as Asda and Marks and Spencer to do so. Marks and Spencer announced record profits today, which is marvellous.

I congratulate my hon. Friend on securing this debate. Does she share my disappointment that the British Retail Consortium has withdrawn from negotiations? The message from this forum is that the BRC must return to the negotiating table and redouble its efforts. Given that Farepak is the third company in the sector to go bust, in my capacity as the Chairman of the Select Committee on the Treasury, I have written to Sir Callum McCarthy, the chairman of the Financial Services Authority, to say that the sector needs regulating. Before the end of the debate this morning, the Minister must address that point.

I could not agree more. Soon after the issue was raised on the Floor of the House during Trade and Industry questions on 19 October, all our hopes were raised with news of a British Retail Consortium good-will gesture. However, like many other Members, I was disappointed that, at home time last Thursday, just as we were leaving Parliament for our constituencies, so no one could be found to appear on the news, the BRC slipped out the news that it would not put together a rescue package. It is disappointing.

I shall make some progress.

The BRC let Farepak customers down badly by promising something that it could not deliver. However, there are ways forward, as some of our big retailers have shown.

My hon. Friend may not know, but Members debating a statutory instrument on the Big Lottery Fund last week identified that the fund had not allocated some £10 million. It might be useful if the Minister were to approach the fund for that money.

That sounds like a very interesting way forward, and I am sure that the Minister will consider it.

I thank my hon. Friend. I suggest a further source of funding: dormant bank accounts. There are billions of pounds in such accounts, and perhaps that should be tapped into to be fair to the people who have suffered under Farepak.

My hon. Friends are coming up with creative ways to find the money, as I would expect. As long as there are organisations willing to act as distributors, we can achieve something. In my constituency, the radio station GWR FM is distributing gifts collected via various avenues. I shall be going along this Saturday when they distribute them. I will take my gifts from the House of Commons shop—the teddy bears George and Toffee—and I hope that other hon. Members will do the same for the children of their constituents.

Loan sharks are now banging on the door, asking whether my constituents need expensive credit at an annual percentage rate of at least 120 per cent. The Minister might like to help me to endorse credit unions as a way forward. They can provide emergency loans of up to £250 for each saver. Usually those loans are available only to those who have saved for a minimum of 12 weeks, which would cut out the Farepak customers if they were to join now. However, Farepak customers have shown that they can save regularly. I have asked some companies in Swindon to donate £1,000 each to underwrite the loans, thus making it possible for those opening new accounts this week to receive a loan before Christmas at an interest rate of 12.6 per cent. I can announce today that MAN ERF and Nationwide, which have their headquarters in South Swindon, have already pledged £1,000 each. In that way I hope to keep people in Swindon out of the clutches of loan sharks who charge interest rates of between 197 per cent. and 500 per cent. The cash donations will help families to start on the right savings path.

Is my hon. Friend aware that there has been a little good news this morning with the announcement by Park Group, an organisation similar to Farepak, that it has offered £1 million in compensation to be put into any rescue package that can be put together?

Those rescue packages are indeed welcome, but hamper firms must have stringent regulations imposed on them, so that this never happens again.

Will the hon. Lady pay tribute to the work of the citizens advice bureaux? She will no doubt accept that credit unions are unevenly distributed around the country, and even where there are such unions, people will not be able to avail themselves of their services before Christmas. Even though credit unions are part of the solution, the Minister should be aware that they will not help this year. Does the hon. Lady agree that, in the longer term, the Financial Services Authority should control such companies, as it does, for example, holiday companies?

I agree with the hon. Gentleman on the last point. I congratulate the citizens advice bureaux on the work that they are doing, and I also congratulate the churches in my constituency that have been counselling depressed people.

My hon. Friend the Member for Workington has collected £10,000 from the Nuclear Decommissioning Authority to help to expand the credit union scheme in his constituency. I wish to announce, and help to launch, an appeal by the Western Daily Press, which is co-ordinating an effort that I hope will get hundreds, if not thousands, of Christmas gifts to Farepak customers. Congratulations to it.

Does the hon. Lady agree that, if such voluntary measures are not effective, the best way to secure compensation will be for the Department of Trade and Industry’s investigation to recommend who should pay compensation, how much and by when?

There are 47 shopping days until Christmas, and we need to get on with this as quickly as possible. The DTI needs to bring forward a scheme, and I am pressing for that.

I hope that the Minister will join me and other hon. Members in calling on the top retail companies, who do so well at Christmas, to use their corporate social responsibility budgets to help to save our constituents from loan sharks and to give them a good Christmas. My constituents have been adding to the profits of those companies in recent days by buying extra toys for the GWR charity campaign.

One of the most obvious companies to which we should look is Findel plc. On Friday 13 October, when Farepak went to the wall, Kleeneze was bought by Findel plc. It has a database of Farepak’s customers and is in a position to support fundraising schemes. It has issued a press release suggesting that FTSE 100 companies contribute £50,000 into a savings fund, which would be interesting. Does the Minister know how much of Farepak’s customers’ money can be traced to Findel? I doubt whether that is a legal issue, but as a matter of corporate responsibility, Findel should help Farepak customers.

I am grateful to my hon. Friend for her excellent leadership and for introducing the debate. Although I welcome all the initiatives that are intended to help people, my constituents take the view that they want their money or their vouchers, and if under the present law people cannot be held accountable, the law ought to be changed.

My right hon. Friend makes an excellent point, and I am about to turn to that issue. We must provide more than something under the tree or on the table for these folk; we should make every effort to ensure that they get justice. There has been a lot of talk in the House recently, in discussions on the Companies Bill, about corporate social responsibility. We should also be able to talk about corporate social irresponsibility. What Farepak did was immoral, but I am interested in whether it was also illegal.

We do not have the stocks any more, but I wish publicly to name the Farepak directors. [Hon. Members: “Hear, hear.”]. They were the finance director and company secretary Stevan Fowler, the independent non-executive directors Neil Gillis, Paul Munn and Michael Johns, the chief executive William Rollason—I understand that he is soon to appear in an Australian court, possibly on a not unrelated matter involving another company—the executive director Nicholas Gilodi-Johnson, who is set to inherit £70 million, and the chairman Sir Clive Thompson, formerly of Rentokil, who is a modern-day Scrooge. He bemoaned a 30p rise in the minimum wage when he was earning more that £2 million a year, he wound up the pension scheme at Rentokil for all but the executives and then walked off with a £690,000 a year pension. No doubt Sir Clive and the directors will be eating a very big turkey this Christmas and enjoying it.

My hon. Friend might be aware that Sir Clive Thompson is also a director of iSoft, which is attracting news and attention for other reasons at the moment. If she were running a company and looking for a non-executive director, would she be looking in the general direction of Clive Thompson?

Is my hon. Friend aware that Farepak continued receiving money from customers up to 13 October, when it went into administration, even though its shares were suspended in August?

My hon. Friend is right; a cheque from one of my constituents was cashed 15 minutes before the administration.

I understand that the administrator has a statutory duty to report to the Secretary of State for Trade and Industry, and if the administrator considers that the conduct of any director makes him unfit to be the director of a limited company, as the administrator can prevent him from being one. We are discussing very rich men. They are rich off the backs of the hard work of our constituents, who now have nothing at Christmas. That is not justice.

Does my hon. Friend agree that once the matter has been fully investigated, either civil or criminal action should be taken, if possible, against the individuals responsible in the company, considering the level of suffering caused to so many people?

My hon. Friend is absolutely right; that should follow. The Secretary of State has announced that there will be an investigation into the company’s dealings.

Was it fraudulent, after Farepak announced in July that it was running out of money, for it to continue to take Christmas money from families until October? I hope that the Minister can tell us whether the Farepak directors will be investigated for fraud, as my hon. Friend the Member for Livingston (Mr. Devine) asked last week in business questions. The Government have the power to ask for any documents or records and recommend that legal action be taken if the company has been involved in wrongdoing. If the Minister ensures that the administrator has the funds necessary to carry out a full investigation, so that the case does not end up as just another insolvency statistic, that will be a Christmas gift that both the Farepak customers and the Farepak directors really deserve.

My hon. Friend will know that Findel plc is quoted as indicating that the rescue package would be £10 million. Is that not a sign of how much the directors have robbed from our constituents?

It is indeed, but we are talking about even larger sums of up to £45 million. The Minister should look again at who should be regulated. He might come to the conclusion that all companies such as Farepak where people pay up front should be regulated.

My hon. Friend rightly attributes blame where it should be attributed, but does she understand that many of the 25,000 agents throughout the country feel personally guilty? Will she make it absolutely clear that neither she nor any other hon. Member in the Chamber feels that the agents are responsible? Indeed, they are probably the most responsible people in many of the poorest communities in the country.

They are indeed. The agents hold their communities together, and have a strong sense of financial probity and community spirit. Many of them are sitting in the Gallery watching the debate, so I thank my hon. Friend for raising that issue.

On Farepak’s business model, does my hon. Friend agree that companies that take money from the very poorest sections of our society without giving any interest or any products up front should be classed as offering a financial service? It is a case of taking from the very poorest and giving, as she said, to the very richest.

Absolutely—my hon. Friend is quite right.

There is also the issue of the bond. A lot of people wrote to me to say that the company had a bond, but it was laughable. It made customers feel protected, but it was for £100,000, which is peanuts as compared with £45 million. The Hamper Industry Trade Association Ltd called the bond

“a commitment of good intent”.

I hope that the Minister will say that, if a company advertises a bond, it should be sufficient to cover that company’s liabilities.

We are told that the Hamper Industry Trade Association Ltd urged Farepak in August to safeguard its savers’ money, but the firm said that protecting clients was not a legal requirement. I think that it should be and I hope that hon. Members in all parts of the Chamber think so, too.

I thank my hon. Friend for giving way. It is essentially on a technicality that such companies are not covered by the Financial Services Authority—because such payments are regarded as a deposit on goods—even though everybody knows that they are financial services organisations. That is how many of the customers and the collectors viewed Farepak. Does my hon. Friend regard that as a loophole that needs to be closed?

That is indeed a loophole that needs to be closed. If the industry is unable to regulate itself—as it has shown itself to be unable—we should legislate in this place.

I have asked a lot of questions of the Minister, as will other hon. Members after me. We have been very demanding and asked for every avenue to be pursued. The Minister knows why—for my constituents, this is the nightmare before Christmas. The tabloids have compared the Farepak directors to the Grinches that stole Christmas. The Minister has done much good work on the issue so far. Independent parties, such as the website, have praised my right hon. Friend for his efforts. For every family whom he can help, he will be seen as the man who saved Christmas.

I am not looking forward to a Christmas eve when parents in Swindon are faced with explaining why Father Christmas cannot call this year. I hope that the Minister will do everything that he can to make sure that that never happens again. I realise that we have a long way to go on the issue. Will he tell the Chamber where he intends to start?

Order. I want the summing-up speeches to start at 10.30 am, because I know that the Minister has a great deal to say. That means a bit of discipline from hon. Members. Thirteen have indicated in advance that they want to speak, which means less than three minutes each. It would help if hon. Members kept to that, because many people have a lot to say.

I congratulate the hon. Member for South Swindon (Anne Snelgrove) on securing the debate. It is an indication of the impact that the scandal has had on constituencies throughout the country, and hon. Members from all parties, that we have a record attendance for a Westminster Hall debate.

Various adjectives have been used to describe the situation, including scandalous, incredible, unjust and unfair. It is heartbreaking for those involved, as well as shocking, and probably immoral and illegal to boot. In the words of the hon. Lady, this is indeed the nightmare before Christmas. In my constituency, 19 individuals in one small town alone are affected, while one lady in another town has lost £15,000. As the hon. Lady said, that money has been hard saved by people who do not have alternative means of saving. They have chosen that vehicle because, once the money was there, they could not get their hands on it in times of hardship.

The agents have been mentioned. They are obviously furious, because there has been no communication whatever from the management of Farepak. The agents have been totally abandoned and are feeling incredibly guilty, as the hon. Member for Rhondda (Chris Bryant) said. That is something that we, as parliamentarians, need to address. The agents were taking their friends’ and neighbours’ savings in good faith. One of the key components of the system is that people hand their money over to someone whom they trust. That trust has been entirely undermined and it behoves us to try to do something to rectify that.

I am pleased that the Minister is going to solve the problem—if not today, then fairly soon. He has been described as the new Father Christmas and I cannot think of anyone else in whose hands I would better place such a vexatious problem. I shall obviously be interested to hear what he has to say, as there are questions that he needs to answer.

What can we do immediately for the people who are affected? Several constructive ideas have been proposed and I am sure that more will be forthcoming. We need to send out assurances from Parliament to show that the problem will never arise again. Changes in the law seem vital and overdue. As has been asked, how can we advise and help people to avoid falling into the hands of loan sharks? We need to communicate to people that there are alternatives that they should use, although that will perhaps not solve their immediate problems.

Another question that I hope the Minister will address is whether Halifax Bank of Scotland will be held accountable for its role in the disaster. The bank apparently allowed Farepak to continue trading to recoup its overdraft. Should not HBOS have declared Farepak to be in administration long before that finally came about? The Secretary of State has announced that officers from the company investigations branch have started an investigation under the Companies Act 1985. Will the investigation put the directors of Farepak and its parent company in the dock?

I shall not, as I have only a few minutes.

It is outrageous that peoples’ savings should be stolen in that way. I was delighted that the hon. Member for South Swindon named and shamed some of the individuals involved, but surely any investigation should not stop at Farepak alone. We should be going for the directors of associated and parent companies.

The Government should recognise that the group of consumers affected followed the Government’s agenda: they were saving. They were taking responsible action to save for their future and to avoid personal debt. There is therefore a case for the Government to do all that they can to make funds available to help such families—possibly not directly, but certainly by organising a response from the retail sector.

In the long term, we need new legislation. Adequate provisions should be made to protect consumers’ money prior to the delivery of the goods and services that they buy. That would ensure that consumer moneys paid to Christmas hamper companies are protected should those companies go into liquidation. I would have thought that the Financial Services Authority would be best placed to regulate such companies.

I congratulate my hon. Friend the Member for South Swindon (Anne Snelgrove) on her powerful speech and her advocacy on such an important cause. As has been said, the fact that so many right hon. and hon. Members are here—this is surely the best attended Westminster Hall debate—shows the extent and depth of concern, reflecting that of our constituents, that something must be done. As she said, it is particularly tragic that so many of those affected can least afford to lose that kind of money—least of all at this time of year.

Many of my constituents are affected, as are those of other hon. Members. A lot face the loss of hundreds of pounds. Our local paper, the Oxford Mail, reported the case of a mother of six and her daughter, a mother of one, who had paid in £900 and £450 respectively. It is not hard to imagine what a blow the collapse has been for their Christmas.

A local agent and near neighbour of mine, Debbie Simms, who first alerted me to the scale of loss locally, paid her final instalment of £1,600 into the bank on Friday 13 October, shortly before the administrators were called into Farepak at quarter-past 2 that very day. She and I have been considering whether there is any way of getting the money back from the bank concerned.

The questions to which we must get answers and on which my right hon. Friend the Minister must act, although I know that he is already doing so, fall under three key headings. First, how did the collapse happen and could it have been avoided? As my affected constituents have pointed out, there were signs that something was wrong when shares in the parent company, European Home Retail, were suspended in August. How was Farepak allowed to go on collecting money? How is it that, as The Sunday Telegraph reported, millions of pounds were regularly transferred between Farepak and EHR? How is it that Farepak’s bank, HBOS, continued to take in customers’ money to credit a company that it must have known was in serious difficulty?

The Department of Trade and Industry inquiry must get clear answers on such questions and on the responsibility of Farepak directors. It must also have lessons to learn in respect of my second key question: how can we better protect the hard-earned money of people who save up for Christmas in such a way? After all, as has been pointed out, Christmas hamper schemes such as this one are, to all intents and purposes, savings schemes. They should be regulated as savings schemes and brought within the supervision of the Financial Services Authority. There is a clear need for standards. There should be oversight of the adequacy of such schemes’ financial positions and protection against money being siphoned off to elsewhere within a group. Furthermore, a bond or insurance scheme that protects against financial insolvency should be set up. I hope that my right hon. Friend the Minister can provide positive assurances that action, with legislation when necessary, will be taken as a matter of urgency on all those points.

The third and most pressing question of all is about what can be done now to help those who have lost out. I commend the speed with which my right hon. Friend, as Minister with responsibility for consumer affairs, moved to try to get a goodwill contribution from the British Retail Consortium. It was a bitter disappointment when it decided that as an organisation it could not help. I had written to the chief executives of Tesco, Asda and Sainsbury’s, all of which serve my constituency, asking whether they could donate just some of their profits in that very worthwhile direction.

I am interested to hear about the various rescue packages—the Big Lottery Fund, Sainsbury’s and so on. As someone who is on the record as praising HBOS for its commitment to installing free-to-use ATMs throughout Scotland and the north of England—many Members have signed an early-day motion to that effect—I question its part in this whole sorry state of affairs. Does my right hon. Friend agree that instead of looking at rescue packages, we should be looking at the profits of HBOS and asking it to make good the losses suffered by our constituents?

I have been critical of the role of HBOS in this affair and we can all think of a worthy destination for some of its profits.

Like my hon. Friend the Member for South Swindon, I am pleased that Tesco has decided to make a significant contribution, and I welcome the announcement from Sainsbury’s as well. Let that be a clarion call to other retailers, and to the banks involved, to show some Christmas spirit.

Will the Minister pursue the idea of the London stock exchange dedicating a traders’ day of contributions for Farepak victims? I welcome the response from credit unions, and my own, in Blackbird Leys, has said that it will look sympathetically at the idea of low-interest loans to help those affected. It is important that people do not get deep into debt to doorstep loan sharks to try to buy their children a good Christmas. On a last very important point, I ask that everything is done as quickly as possible to get to the bottom of how many in each area have lost out. I say that because locally a lot of people are interested in helping out. I had an inquiry from a local business organisation at the weekend, and there is enormous good will from the public and in the local media towards the Farepak victims.

If businesses and others are to make a commitment to helping, they quite reasonably want to know the scale of the commitment that they are taking on. We need to take urgent steps to work out how many are affected and to what extent. I have been on to the administrator about that, and I hope my right hon. Friend the Minister can say something about it.

The collapse is a terrible thing. We must send a message that we want the inquiry and the Government to get to the bottom of how it happened and how the families were defrauded. We want action to stop it happening again, and we want to make it as easy as possible for businesses, and the community as a whole, to rally round and help the families enjoy the Christmas for which they saved up.

I join other hon. Members in congratulating the hon. Member for South Swindon (Anne Snelgrove) on securing this debate and on the enormous amount of campaigning work that she has done on the subject. Her opening remarks set a great example for the debate.

Like those of other MPs, my constituents have lost many thousands of pounds. By way of illustration, people in the two communities of Kingussie and Newtonmore, where the total population is a little under 3,000, have lost about £75,000. That illustrates how in many cases the scandal has hit the most close-knit communities hardest, and the people on the lowest incomes most of all. As one of my constituents put it to me:

“The money lost is, for many, the difference between being able to afford to provide the children with the extras that others enjoy over the festive period. The timing is unacceptable. Had this been ceased last March or April, it would have been an inconvenience, but we would all have been able to recover. But to wait until all customers have completed between 90 and 100 per cent. of their payments must rank as fraudulent. Why did they continue to collect money, knowing they would be unable to honour this, and where have these funds gone?”

That is the core of what we must discuss.

I endorse what my hon. Friend says, but does he agree that, particularly among our smaller rural communities, the guilt to which the hon. Member for Rhondda (Chris Bryant) alluded is very real? There is no reason for that guilt; it is the conduct of the company that needs to be held to account. Through no fault of their own, people are feeling very vulnerable in such communities.

I agree. One of my constituents was an agent and said that she intended to take it on herself to repay all the payments to the people with whom she had worked. That is an illustration of the attitude and of the guilt felt—quite unjustifiably, given that the problems are the responsibility of the company directors.

This is an important point. The British Retail Consortium is maintaining that one reason why it cannot put together a scheme is that there is no list of all the Farepak customers. The truth is that there is a list of all the agents, who are some of the most responsible people in this country when it comes to finances. That list could be an important source of getting the problem sorted out.

The hon. Gentleman is absolutely right. The agents are among the most responsible people in this country. I hope that the Minister takes up his point.

I have a couple of brief points to make. They follow on from the questions raised by the hon. Member for South Swindon. It is notable that just before the company went into administration, the non-Farepak parts of the European Home Retail consortium were sold off for £34 million. I trust that the proper use of that money and the propriety of that transaction will form part of the Department of Trade and Industry inquiry.

Given the intervention by the hon. Member for Rhondda (Chris Bryant), will the Minister clarify the position vis-à-vis the British Retail Consortium? I have a letter here from Findel plc which other Members may have received. It says specifically that Findel has the database of Farepak customers. Will the Minister confirm whether the BRC is indeed maintaining that it cannot operate a scheme because of the absence of such a database? That would be helpful. If that is its position, he will presumably be able to go back to it and point out that there is such a database and that Findel is apparently willing to make it available.

I am grateful for that intervention and hope that the Minister answers the question.

What is the role of HBOS in all of this? Surely it must have been aware that savers’ money—they were savers, whatever the technical definition—was being used to pay off outside debts? The bank must have known where the perhaps £1 million a week in repayments was coming from.

HBOS stated that it had accommodated Farepak on many occasions to allow its management every opportunity to find a solution to the financial challenges. HBOS knew that the company had problems. Therefore, should it not acknowledge to the customers, who also no doubt bank with HBOS, its responsibility for dealing with the problem?

Whatever the legalities of HBOS’s role, its activities in this murky scandal have been morally highly dubious.

Is not the response of HBOS staggering? It has taken a legalistic route, but not only are people denied money that is theirs, they are now forced into the loan-shark regime, which will mean taking on debts that they probably cannot hope ever to repay.

I very much agree. As other hon. Members said, HBOS’s vast profits dwarf the losses of the people who are caught in this situation.

Does the hon. Gentleman not find it ironic that probably he along with myself, other Members of the Scottish parliamentary group and all the Members of the Scottish Parliament have been invited by HBOS to a champagne reception at the reopening of its refurbished headquarters on the Mound? Will he come with me and the people who have been ripped off by HBOS and Farepak to protest outside the champagne reception and demand that money is given back to the people from whom it has been taken?

I do not know whether I can accompany the hon. Gentleman, but he is right: the champagne at that event should have a bitter taste.

Will the Minister confirm that the DTI inquiry into the affairs of Farepak will include an investigation into the role played by the bank? It is critical that those issues are fleshed out in the official investigation.

The Minister has already done much good work on the subject, and I join other hon. Members in praising him for it. However, a great deal more needs to be done. I am sure that others will reinforce that statement.

Order. I remind hon. Members that we are very short of time. We may be down to about two minutes each. I am in hon. Members’ hands.

Thank you, Miss Begg. Most of my points have already been covered, but I would like the Minister to comment in his winding up speech on a statement made by Neil Henderson-Begg, who represents the Hamper Industry Trade Association. After the collapse, he stated:

“It seems odd that Farepak declared its financial position untenable at the time of the year when it is holding most cash—when contributions are almost fully paid-up. Customers will want to know where their pre-payments have gone.”

Naturally, they will. He said that customers are concerned about the time that elapsed between the suspension of EHR shares and Farepak’s ceasing trading, and that

“Others want to know whether their money went towards making other firms in the EHR group attractive enough to be immediately snapped up”,

which they were, very shortly after the collapse. He added that customers also need to know why Farepak’s lending banks allowed the situation to go as far as it did. That point has been touched on by several hon. Members.

I also ask that the Minister examine closely whether the Government are one of Farepak’s creditors. Sadly, in the past, the small investor has normally been the last to be compensated. On this occasion, the Government and other large creditors should set an example, step back and allow any assets of the company to be used to form a compensation package for those people who have been so devastated by the loss of all their savings.

I shall speak briefly on that very theme. I congratulate the hon. Member for South Swindon (Anne Snelgrove) on her immensely impressive leadership on the issue.

We know that much of Farepak customers’ money was used for shopping, retail and gift vouchers, on which VAT was payable. VAT used to be payable on face-value vouchers only when they were redeemed, but that changed in 2003, so that VAT is payable when the vouchers are purchased. Unfortunately, the Government are usually at the front of the queue of creditors in such situations. We are talking about millions of pounds of VAT that was paid by Farepak customers. It is only right that that money should be repaid to them, as they did not get the goods on which it was paid.

Hon. Members should talk sense. First, national insurance contributions, if they have been paid—there is no guarantee that they were—are for the pensions and unemployment and other benefits of the people who used to work for the company. We must get this straight: it is not the Government’s money. It is former employees’ money, and it is still to be found in the investigation whether it was paid. On VAT, again, until the investigation is complete, we cannot guarantee that any money was paid to the Government. We would like some sensible contributions, not ones that raise Aunt Sallies to be knocked down in order to get a political headline. That will not help the people we want to help.

I take the Minister’s point, but if VAT has been paid, clearly the Minister will want to consider hon. Members’ comments in that respect.

On what can be done in the future, we look forward to hearing what stage the Minister’s discussions with the Financial Services Authority have reached. Farepak is not the first case of a Christmas hamper voucher company getting into difficulties. There was the case of FHSC in February, and Choice Gift Vouchers went into bankruptcy earlier this year. We need to know what can be done now, given that several companies have had difficulties. We look forward to hearing what the Minister has to say about how quickly secondary legislation can be introduced under the Financial Services and Markets Act 2000 to add such companies to the list of those that are regulated.

Several hon. Members have rightly mentioned HBOS. One of the key questions that we need an answer to is why the offer from Park to buy Farepak was rejected twice. Park is the company that rescued FHSC and that prevented its customers from getting into the same problems as Farepak’s customers. What was the role of HBOS in preventing that rescue offer from being accepted?

My hon. Friend mentions the role of HBOS, and we have heard about the roles that many people played. Is it not the case that the Minister, who has been working hard on the issue, needs to get all those people around the table so that they can all contribute to helping those who have lost out? Does my hon. Friend share my worry that the British Retail Consortium has said that there is no central database of customers? If that is so, it will be difficult to put together a rescue package.

We have heard about the Findel letter. If there is a database, surely the key reason for the BRC’s rejection of any offer is redundant. I am sure that the Minister will agree that the BRC must urgently revisit the offer that was initially made.

I pay tribute to my hon. Friend the Member for South Swindon (Anne Snelgrove) for securing this debate. Let us be very clear what the debate is about: it is about legalised money-laundering, from the poor to the rich. Sir Clive Thompson is, without doubt, the 21st-century equivalent of the sheriff of Nottingham. I hope that later the Minister will play the role of Robin Hood.

This is an absolute scandal involving the organised poor. I do not say that in a patronising manner. Those people did not use loan sharks, bank overdrafts or credit cards; they saved. How many people are involved? Farepak had between 26,000 and 29,000 agents. If each of them had 10 clients, it would mean that Christmas has, in effect, been cancelled for 300,000 people.

Serious questions must be asked about the company. How long had it been in financial difficulty? It left the Direct Selling Association in 2004; if it were a member of the DSA today, it would have to compensate the people who lost their money. That suggests that it has been in difficulties for many years. Staff who worked in its headquarters have said to me that they knew that the company was in trouble last December. Financial newspapers were flagging up problems in June. The share price crashed in August, yet Farepak continued to take money when the vast majority of people had paid over the money. My constituent Carol Gullian has lost £12,500 as an agent. At a public meeting held in Blackburn, West Lothian, last week, more than 100 people turned up who had lost more than £100,000 between them. That is the extent of the scandal. Farepak were still writing letters to my constituents in March telling them that everything was okay, not to worry and that everything would be good this year.

HBOS made £4.8 billion profit last year. I have been told by somebody closely involved in that a rescue plan was organised in June this year and that £3.5 million was needed from HBOS, but it did not put the money in. If that is the case, HBOS directors need to be brought to the House to give a full explanation of their role in that deal.

I pay compliments to my hon. Friend and neighbour for the work that he has done on Farepak. He is known throughout Scotland as a leader on this problem. Does he agree that no Scottish Member of Parliament, no Member of the Scottish Parliament and no dignitary who represents anyone in Scotland should attend the champagne function that HBOS has invited us to at its headquarters?

I would be grateful for the opportunity to join my hon. Friend at that demonstration outside the company’s headquarters. I agree that the same message should apply to everybody else.

Given the time pressures, let me say, in summary, that I do not believe that the Department of Trade and Industry alone should be investigating the company and its directors. The Serious Fraud Office should be called in to investigate the company. I have written to the forfeiture body to say that Sir Clive Thompson should have his knighthood withdrawn. He got it in 1996 for services to industry, would you believe? We obviously need legislation, and I look forward to hearing what the Minister has to say.

I, like others, have a number of constituents who have been deeply affected by the Farepak escapade and who, as a result, will suffer at Christmas. One of my constituents, who has acted as an agent for Farepak, came to see me recently on behalf of all the friends from whom she had, in good faith, accepted payments. She wanted to know what, if anything, she could do to put things right. She was particularly concerned that she might in some way be to blame. I did my best to reassure her and have written to the administrators, the Minister and Norfolk trading standards to seek their advice.

My constituents and I, in common with those in attendance today and the thousands they represent, seek the Government’s answer to a number of questions. What can be done in the immediate future to facilitate a rescue to help those who have lost significant amounts of money? I am pleased that the Minister for Trade has called for the Financial Services Authority to regulate Christmas savings schemes, but why were they not regulated before? How long will it be before the FSA regulates the schemes? The DTI has launched an inquiry; how long will it take? What steps will be taken to safeguard members of other hamper schemes in the meantime? Most importantly, why was money allowed to be collected after trading in EHR shares was suspended?

I congratulate you on your direction of the debate, Miss Begg. It has been a good debate. I congratulate the hon. Member for South Swindon (Anne Snelgrove) on securing the debate and allowing us the opportunity to discuss this matter.

I shall be brief. To me, the collapse of Farepak is a crisis, but to many people, such as the low-income families in my constituency and adjoining constituencies, it is a tragedy. Some figures have been bandied about. In my area, one lady, Linda Robinson, is out £20,000, £5,000 of which is not recorded. She has receipts for only £15,000 and the receipts for the rest are missing. Donna Lavery has lost £4,000. Sharon Gilmore is a single mother and she and her 90-year-old grandmother are caught up in the business, with a similar amount of money having gone missing through Farepak.

We estimate that some 3,000 people in Northern Ireland are affected by the problem, although we need to establish the exact numbers and how much each has lost. I welcome what some hon. Members have said about agents having more information, but some of the agents’ bookkeeping might not be as good as it should be. I appeal to the Minister to establish a single relief company or agency in each region, so that relief efforts can be co-ordinated and so that people will find Christmas. Perhaps the consumer councils in the regions would be useful. There is a desperate need to establish the exact amount of exposure, because Farepak was neither efficient nor effective in its management. I believe that money handed over in the past two weeks might not be accurately recorded and that the accounts might not be made available to the liquidator.

As I see it, we have three main tasks: to get relief urgently to those who have been robbed; aggressively to pursue criminal charges through the fraud squad or whatever other squad is required to ensure that the poor conduct of the company is punished; and to ensure that such a problem never happens again, perhaps through regulation. As the hon. Member for Wakefield (Mary Creagh) said, stringent financial controls, bonds and whatever else is necessary should be used. We need, too, to work with banks, credit unions and those responsible in the Treasury to ensure that those who have been savagely affected by the problems are not thrown into the arms of loan sharks to get past Christmas.

I will be as brief as I can, Miss Begg.

I have written to two dozen chief executives of high street businesses. A couple have responded already, but I found it almost breathtaking that one said that although they could not help directly, one idea that might be of interest would be if they sought to raise funds through collections or other fundraising activities in their stores. I am pleading with those companies to fork out and to help people, not to ask their customers to put money into a collection. That is not what is required.

In all honesty, I do not know how many people in my constituency have been affected or the sums involved. Before the debate, I spoke to someone connected with the administrators and asked whether they knew the numbers of agents and customers or the sums involved. The answer was simply, “No, we don’t.” Findel may well say that it has a database, but I am not convinced that anyone knows the true figures. I echo the plea that was made earlier: the British Retail Consortium should return to the table. However, above all else, we need to investigate the matter fully and if there has been criminal activity, we should deal with those people through the Proceeds of Crime Act 2002. We need to deal with that once we have tried to recover the situation for the good people of this country who put their faith in the company.

Many people in my constituency have been affected by the collapse. One agent has lost £11,000 and is still waiting for a reply from the administrator. Another has lost £18,500, and I know of individual savers who have lost between £150 and £450 each.

I want to comment briefly on the role of individuals, and of the directors in particular. Although I go along with the administrators’ applauding the Government and the action that they have taken under the Companies Act 1985, we have to be sensible. Disqualification of directors is not what we are talking about. We have heard a lot of things today, and the disqualification of directors is not the end result that we are looking for. I am told that the administrators have realised £2.5 million and I call on the administrators to ensure that that money goes not to the preferred creditors, but to those who were the savers and the backbone of the industry. Clackmannanshire council and the Alloa and District Round Table are each putting in £5,000, and they are calling on industries and businesses in Clackmannanshire to do the same, so that Farepak savers there can have at least some sort of Christmas.

My last comments are to do with the role of the Hamper Industry Trade Association. We know that it has five members, including Farepak, and that it has a voluntary and unenforceable code of practice, with a bond of £100,000. HITA called on its members to give due attention to safeguarding their customers’ money. I wrote to HITA on 25 October and received a reply from the secretary. He wrote that the collapse was extremely unfortunate but that he is on holiday from 2 November until the 12th. On behalf of a number of my constituents, I invited him to meet hon. Members at the House. He refused to do so, but although others have had a part to play, HITA and its member organisations should be called to the House to explain their role, so that Members can explain it to those who have lost their money.

It is incomprehensible to me how a company that takes in money a considerable time before it has to deliver the goods to its customers can get into such a mess. Constituents of mine put it bluntly; they call it theft. I have three questions for the Minister.

First, will my right hon. Friend update us on the latest prospect of immediate help for those who have lost money? Secondly, I understand that the Hamper Industry Trade Association has stressed that the situation is by no means a reflection on the Christmas savings industry as a whole. I am afraid that the public will judge it as such, and that may lead to a considerable future loss of confidence in the trade, even among companies that act honourably.

The Farepak collapse also raises the question of what sort of protection is available to those saving with hamper schemes. Anyone saving with a bank or a credit union is covered by the financial services compensation scheme, which compensates 100 per cent. up to £2,000 loss and 90 per cent. for the next £33,000. The hamper industry, like other industries that collect savings a long time in advance of delivery, clearly needs to have a similar protection scheme to safeguard its customers. We need proper regulation, together with realistic bonds, in order to provide proper protection for savers and to ensure that nothing like this can happen again.

Thirdly, will the Minister give a categorical assurance that the investigation into Farepak will be thorough and that if there has been wrongdoing it will be properly punished?

Order. Everyone has been extremely well-disciplined, and I am sorry to the remaining Back Benchers who wish to speak, but we now come to the Front-Bench speeches. I ask the Opposition Front-Bench spokesmen to be brief in order to allow the Minister the maximum time.

I shall be very brief, Miss Begg. We have had an excellent debate, and I congratulate the hon. Member for South Swindon (Anne Snelgrove) on initiating it. The issue has touched the hearts of hon. Members and of people throughout the United Kingdom.

I shall focus on how the problem arose. The industry is unregulated. It falls within the retail sector, not the savings sector, but in principle it operates in a similar way to credit unions. The hamper industry depends on each company fulfilling its part of the bargain.

In February this year Family Hampers went bust. The system allowed customers to pay in their savings, the company would bank the money and vouchers were issued to customers by a separate voucher company. The company then invoiced the Christmas club, and the shops invoiced the voucher company. When Family Hampers went bust, Choice Gift Vouchers went into administration.

The major store groups decided that they had had enough of that—they were £55 million out of pocket. They decided that there should be no more credit and that vouchers should be purchased up front. That led to a funding crisis at European Home Retail, the parent company, and its shares were suspended in August. However, EHR was using Farepak to fund its own deficit, and each month the customers’ savings were being raided like a piggy bank.

Why was that company not put into administration until October? HBOS was still raking in savers’ money to fund the EHR overdraft. The worst thing, however, is that earlier in October the non-Farepak rump of EHR was sold off for £34 million in cash. Where has that money gone? How is it possible to drain a subsidiary of cash and then sell it, leaving tens of thousands of people being owed money?

Does my hon. Friend agree that our constituents, particularly the vulnerable and those who have behaved responsibly, have suffered through the actions or inaction of those with responsibility; that, first and foremost, we must put together a package to rescue them before Christmas; and that the other actions that need to be taken must then kick in quickly?

I am grateful to my hon. Friend. I agree that we need action now, and many hon. Members have made positive suggestions.

Does the hon. Lady agree that all hon. Members must raise awareness of savings and loans facilities and the security provided by the credit unions in supporting people who are in financial crisis? We are not aware of what the Minister will say, but we can at least direct our constituents toward credit unions.

The hon. Lady makes an extremely important point. the last thing that we want is for people to be driven into the hands of the loan sharks. I know that the Minister is meeting representatives of the Office of Fair Trading and the Financial Services Authority. Will he look into the possibility of making regulations to offer savings hampers customers the same protection as the credit unions’ customers?

Does my hon. Friend agree that, in a sense, this fiasco is in the best interests of the hamper industry, because many people will now be wary of saving in that way?

Yes, my hon. Friend makes an important point. The reputation of the hamper industry has been gravely damaged. Regulation would greatly strengthen its reputation, and its ability to deal properly with the money that people entrust to it.

Will the Minister investigate the actions of HBOS? It continued to accept £1 million a month of savings from Farepak, knowing that the company was insolvent. Will he also look into the claims of organisations such as the Hamper Industry Trade Association, which purport to offer protection through a bond until something goes wrong? The British Retail Consortium initially offered to make a goodwill gesture but it seems that its Christmas good will has run out. Indeed, several hon. Members have alluded to the cruel irony that, having made the offer, it has now withdrawn it.

In conclusion, I nominate three candidates for Christmas Scrooge 2006—the British Retail Consortium, HBOS and whoever pocketed the £34 million for the sale of European Home Retail.

Order. I have to tell the House that the heating cannot be adjusted because of the works outside. Although it is not normally in order for hon. Members to remove their jackets—it is a convention of the Chamber—it will be acceptable on this occasion.

I, too, add my commendations to the hon. Member for South Swindon (Anne Snelgrove). She has been leading on this issue in parliamentary questions, in her constituency, and now here. That is very much to her credit.

Many questions have been asked and issues raised, and I am sure that the Minister will want to respond to them in full. I shall attempt to rattle through them; I shall therefore take no interventions.

One issue that arose in debate was the advice given to Farepak agents holding customer payments not yet paid into the company’s account. My understanding is that they had been advised that the money should be returned to the customers. Will the Minister confirm that the administrator has indeed given that advice? As the hon. Member for South Swindon said, the Hamper Industry Trade Association Ltd is reported to have referred to a bond against deposits for member companies. Does the Minister agree that such an offer is largely meaningless in a case of such scale and calibre?

The collapse of Farepak has left many families facing a bleak Christmas. They tried to do the right thing by saving for the festivities, but now they are completely out of pocket—in some cases, to the tune of hundreds of pounds. We do not know the exact number of customers. Some reports suggest that about 120,000 are affected. Indeed, the total amount lost is not clear. Estimates vary between £27 million and £40 million. What we do know is that those people have been robbed of their Christmas.

The collapse seems to have come without any warning to the customers or to the 25,000 or so agents who acted for Farepak. Marisa Cavarra, who was an agent for Farepak in the vale of Glamorgan, told the BBC:

“We had no indication that anything like this was about to happen. I paid my money last month and there were no warnings that there were problems.”

The lack of forewarning is especially concerning given that the parent company, European Home Retail, had its shares suspended three months previously, back in August. Will the Minister ask why it took so long for administrators to be appointed after the shares were suspended and why, as several hon. Members mentioned, payment reminders were sent out to agents during that period?

The absence of information is not the principal concern, however. When one looks at the accounts, one sees that Farepak’s finances looked good. It received a clean audit, had assets of £3.6 million and last year had a profit of £1.6 million, so what went wrong? Where did the families’ money go?

There have been reports, notably in The Sunday Telegraph, that there were significant cash transfers between the parent company, EHR, and Farepak, with the former using the large cash balances of the latter to pay off its overdraft with the group bank, HBOS. Let us be clear: group-wide money management is fairly routine for many companies and is not, of itself, illegal. However, when that money is the savings of individuals, there is a serious problem if those deposits are not secured appropriately.

In 2000, EHR bought a book and toy firm called DMG for £35 million. Apparently, the purchase proved to be a financial disaster and after several asset write-downs, the firm managed to sell DMG—for just £4m. Several analysts have suggested that that episode in particular is the reason why the firm found itself owing millions to its bank. That is when, the reports suggest, the large cash transfers between Farepak and its parent company began in earnest. Someone decided to raid the piggy-bank.

Given that, can the Minister confirm that his Department’s inquiry will specifically consider that aspect of the case and the actions of those responsible for the financial management of the firm, including the advisers and the bank? Equally, I wonder whether he can comment yet on the advice that he received from the Insolvency Service, which he sought on 19 October.

Farepak was one of many Christmas-club companies, which tend to target those on lower incomes and which bank the money on their behalf, usually in return for vouchers that are redeemed in stores such as Woolies or Argos. The more people save, the more vouchers they get. That savings model has been around a long time and typically means that the retailers are extending a lot of credit to the voucher company while it in turn is cash-rich. To be fair, the activity has been around a long time and has, for many lower-income households, been a good informal way to save. As hon. Members said, there is a personal touch to that form of saving, not least because it is often family members who act as agents for the firm. Perhaps most important, that form of saving has helped people who would otherwise never have saved money to start that vital habit.

Therefore, if there are remedial measures to be taken beyond this one business, we need to be careful not to destroy the whole market and, with it, the opportunity that many families have to save. Amid the understandable clamour for regulation, the Minister must not—I am sure that he will not—lose sight of the facts of the case and who is responsible. Given that, will he confirm that his inquiry will include the whole EHR group of companies, its directors, its managers and its advisers? Can he say whether the inquiry will extend to the pensions of the work force and to how many of them have lost all or part of their entitlement? Can he confirm that it is his intention to make public the full results of the inquiry? The families affected deserve to know exactly what happened and who is responsible.

The sudden demise of Farepak has caused great heartache and financial loss—very often, for people who can ill afford to lose any money. As hon. Members have said, it will mean that for thousands of families Christmas will be bleak. The Minister was very quick in responding to the situation, which is to his credit, but what is important now is that the facts are clearly established about Farepak and EHR and that any proposed actions focus on the specific circumstances. If people have failed in their duties, they must be held to account.

It is far too early to say whether this case shows that there is reason to believe that regulation must be imposed on the industry, but once the inquiry is concluded and, we hope, its results published, we shall be able to judge whether Farepak is an isolated case or whether there are wider lessons to be learned. I am sure that, if there is a case for sensible action beyond the circumstances of this case, the Minister will want to return to that issue. Meanwhile, I am certain that the families will want to hear what progress he has made and what news, if any, he has for them about his Department’s inquiry.

Good morning, Miss Begg. I thank all right hon. and hon. Members for participating in what has been a passionate and sometimes genuinely angry debate. People should be angry about the situation that we are discussing. This is one of those areas in which Members of Parliament can, I hope, make a difference.

First, I shall put on record the basic facts of the case. Then I shall talk about what I have been doing and the proposals for a way forward, and give some information about the administration, the investigation and the regulatory framework.

I want to give a commitment. It would not be prudent to answer all the questions that have been asked here today, and I shall explain why. An investigation is going on, and I want to ensure, as the Minister, that I act appropriately, so that if at any later date there are further investigations, inquiries or, indeed, charges, no one can put up a slick lawyer or barrister in the High Court and use what I have said in the House to allow someone to avoid a proper inquiry. It is important that I give as much information as I can, but I also ask hon. Members to trust me. At each stage, I will come back to the House, in a forum such as this or in other forums, to keep hon. Members fully up to date on the inquiry, the investigation and the appropriate action that will need to be taken later.

Like other hon. Members, I was appalled when I heard about what happened. It took me back 35 years to the time when I was a 20-year-old with two children. We paid for our Christmas by joining a hamper club, a Christmas club. That was what a young family did. My parents and grandparents did it before me. It was part and parcel of the community in which I was brought up and it remains part and parcel of that community. These things are deep in the psychology of the community. This is about self-opportunity in saving and ensuring that every member of the family does as well as they can at Christmas. People save throughout the year. It was passed on from generation to generation that that was what we did. That is why the events involving Farepak are so appalling and why I took the action that I did. I know from personal experience what it would be like to be affected by such events.

I shall recap briefly on the basic facts of the case so that everyone is clear about them. Farepak’s main business was essentially a Christmas club. The company took payments during the year, mostly through a network of agents, and delivered in return either vouchers redeemable in a range of stores, or a hamper. Some 10 to 15 per cent. of the business involved hampers. Some 80 to 85 per cent. was done through vouchers. The vouchers would have been sent out about now, the hampers nearer Christmas, and the rest of the industry is currently doing exactly that—hon. Members may be asking what is happening with other companies.

It appears that this company had some 26,000 agents. We are trying to identify, through the administrator, how many of those are active agents. That work is ongoing. The number of customers is uncertain, because the relationship was always with the agents, not the customer base. The company itself had no direct information, but it appears that there are probably in excess of 100,000 customers. That is an estimate from the administrator. The situation has affected whole families and whole streets in communities up and down the country. The total amount due to those customers is not known, but we have heard that many individuals are owed hundreds of pounds and some, at least, are owed thousands.

I would like to give an assurance. BDO Stoy Hayward made a statement a few days ago, following a meeting with me, that cheques sent to Farepak and received by the joint administrators after the company went into administration on 13 October were never banked, and that some customers will already have received their returned cheques. That process will continue for some time. Because of the volume of correspondence to be processed, there is no set limit on the time that it will take for those cheques to arrive, but the administrator is trying to get it done by the end of November. That money will be returned by the administrator, and not seized and retained.

The company was placed in administration on 13 October on application to the High Court. The administrator has confirmed that the company will not be able to fulfil orders that it has received for either vouchers or hampers, and—I must be straight; there is no point in dressing it up—it is pennies, not pounds, that it will return, at the end of the investigation, to those who lost their money.

I cannot comment on the possible reasons for Farepak’s failure. That is, of course, subject to investigations by the administrator and my Department’s companies investigation branch. I cannot prejudge the outcome of those investigations but I undertake to pass on to the investigators all the points raised by hon. Members this morning, including some points that I have heard for the first time.

This is an appalling state of affairs. The impact on so many family Christmases, in so many parts of Britain, can only be imagined. I fully share the concern that so many hon. Members have expressed about the effect on hard-working people, many of them among the least well-off, who aimed to put by something for Christmas, so that when that happy time of year came round again, they could be sure of participating without getting into debt. Let us be clear that the people affected are not ordinary, but extraordinary, and that they come from extraordinary communities, where they try to do the best they can by their families, friends and workmates. What has happened is not their fault. They have been let down by the so-called top people.

My first priority is to mobilise whatever resources or assistance may be available to help to alleviate the impact of the collapse on the customers and their families, in the limited time available before Christmas. That is why I made it clear in the House, when my hon. Friend the Member for South Swindon (Anne Snelgrove) raised the matter in questions on 19 October—I cannot praise her too highly for what she has done, not only in securing the debate, but behind the scenes, with my hon. Friend the Member for Workington (Tony Cunningham) and other colleagues, in their communities—that I had discussed the way forward with the administrators and contacted the British Retail Consortium. That led to a meeting on 21 October to discuss the potential for a good-will gesture to help the most needy people, who have lost out completely. It readily agreed to the meeting, which was held at the Department of Trade and Industry to assess the level of the problem caused by the company going into administration. We agreed that the aim should be to find a package that would be simple, fraud-free and not derisory, and which would be easy to administer at store level as well as providing as much choice as possible for the customers to shop where they wanted.

The retail sector has no legal obligations in the matter, and the package would not have been a compensation package, but the British Retail Consortium accepted in principle the idea of a good-will gesture, given the exceptional circumstances surrounding Christmas, and agreed a statement setting out the arrangement, to be placed in the public domain. I am sorry that the consortium has come to the view that the practical difficulties are too severe, and has abandoned its efforts to devise a good-will package. I am very grateful to the BRC for its help so far and its continued willingness to support our efforts to find a solution. I know from the individual retailers who have contacted me that they remain willing to consider supporting any alternative proposal that is sufficiently simple and timely.

I have also had initial discussions with the chairman of HBOS, Lord Stevenson, about the possibility of the banking community, including his own bank, making a contribution, and we have agreed to further discussions following today’s debate. I am sure that Lord Stevenson would like me to report further to the House on the discussions that we have had. I want to make it clear to hon. Members that I am not in discussions with him about the role of HBOS, or allegations about that role. That is a matter for the investigations. I am discussing his ability, and the sector’s ability, to make a contribution. He has made it clear that some of the allegations in the press are fallacious, and I am sure that a defence will be set out on that basis. However, he has also said that HBOS will, as a company, work with the investigators and support any work that they want to do to get to the bottom of the issues. The discussions that I am having are fire-walled. The other matter is for the investigators, and hon. Members with allegations to make should make those to the investigators, not to me. I shall report back on my discussions with HBOS.

I make it clear to hon. Members that I am not giving up on this issue. I am as committed to it as they are, and we need to make a difference to hard-working people. I was mindful of what the BRC said and accepted what it said, in good faith. I have no reason to believe otherwise. As a consequence, my office and staff have been working around the clock—we were in the office at half-past 1 this morning—trying to bring together what I shall propose. We have been working closely with the Family Fund, a registered charity based in the city of York, whose chief executive is Marion Rowe. She is well-respected in the government, business and charity sectors. She and her team have, in the past few days, been working tirelessly with the administrators. The fund’s main focus is on providing assistance to families with disabled children, and it was originally prompted by the thalidomide disaster, so we are talking to skilled people.

The fund has 30 years of experience of grant-making and providing assistance to families, including the large-scale distribution of vouchers. In 2006, it distributed £27 million on behalf of the Government to more that 46,000 low-income families with disabled children. I am genuinely pleased to announce to the House today that the Family Fund is setting up a dedicated voucher fund for Farepak customers, called the Farepak response fund. The Government are strongly behind that. The fund will be independent of all agencies and will accept donations from all sectors. In recognition of the need for a good-will gesture this Christmas, may I suggest to hon. Members that we should take the moral high ground today? We received a pay rise this week. I ask hon. Members to donate a day’s pay to the fund, because I shall be going out there and asking a lot of people, who have no legal obligation to make a contribution and about whom many remarks have been made today. I want to do that from the moral high ground.

I shall give way to my hon. Friend in a minute.

I know that Members of all parties donate to charities all the time, privately and selflessly, but I think it important to assist the process by doing as I suggest.

My right hon. Friend the Member for Oxford, East (Mr. Smith) asked about the London stock exchange. By coincidence I have made contact with the chief executive of the London stock exchange, Clara Furse, and I hope to talk to her later today about the possibility of organising a trader’s day, in which some of the proceeds of the day’s trading would be turned through the fund into gifts for children, the elderly and people with disabilities, and other vulnerable people who have suffered from the collapse of Farepak.

Many companies and bodies have contacted me to say that they want to help, and they can now do so with confidence because there is a dedicated fund for them to support. There is no reason not to do that. I believe, and so do members of the BRC, that the fund overcomes practical difficulties that the BRC had previously referred to. For example, Tesco contacted me again this morning and committed itself to putting £250,000 in the fund immediately. Others have in principle agreed to support the fund and I hope that in the next few days they will do so. The fund offers the opportunity, whether to a multinational company or a national or local company, to make a contribution—a gesture—large or small. Uniquely, we now have a fund where individuals with resources can also make contributions to help children or others who have been deeply affected by the Christmas failure.

The fund is about the spirit of Christmas. As some of my hon. Friends have shown, there is good will about. I shall place in the Library for all Members in the next 24 hours a full, detailed statement about issues concerning regulatory affairs, administration and the questions that have been asked today. Obviously I shall write personally to the Opposition spokesman. I shall answer all the questions honestly. There will be a reason given when I cannot answer. Let us pull together. This is a national emergency involving more than 100,000 people. We have a few days to do something. Let us go forward with the fund and resolve the issues affecting it. Let us get the resources to the people who need them, and make sure that the regulatory inquiries take place in an appropriate way. That will enable us to deal with the issue effectively.

If that is the only way forward at this point, so be it, but my constituents are not looking for charity. They are looking for their money. Will the Minister join me in calling for HBOS to donate perhaps £34 million to the fund?

I am not asking for charity, but I am not going to go for a quick headline with a comment like that. We are trying to have detailed discussions with companies. My job is to get those companies to make the payment, and I am trying my best to do that.

I congratulate my right hon. Friend on the work that he and his Department have done, and give heartfelt thanks on behalf of my constituents, and other hon. Members’ constituents.

I thank my colleagues for the debate and the support, and I ask hon. Members to go back to their constituencies and to make contact with the companies to make sure that they contribute to the fund.