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Volume 488: debated on Wednesday 25 February 2009

1. What representations he has received from charities affected by the collapse of Kaupthing Singer and Friedlander. (257848)

On behalf of the Labour Front Bench, I offer our sincere condolences to the Leader of the Opposition and his family on the tragic loss overnight of their son, Ivan. The House will have an opportunity to offer its thoughts and prayers after this Question Time.

I have received correspondence from affected charities and met representatives of the Save Our Savings group of charities on 27 January.

I think it would be appropriate, on behalf of my colleagues on the Liberal Democrat Benches, to extend our sincere condolences to the Leader of the Opposition.

The Parliamentary Secretary knows that, in addition to the thousands of individuals who stand to lose considerable sums of money in Kaupthing Singer and Friedlander, 27 charities collectively stand to lose some £50 million of investment. Does he agree that such a loss to those charities will be a considerable financial burden and have a significant impact on them? Will he therefore agree to redouble his efforts to ensure that the charities, as well as individual investors, have their funds returned in full?

The hon. Gentleman knows that a process of administration is taking place and that a compensation scheme is available for smaller organisations that count as retail depositors. I have agreed to meet a delegation of Members of Parliament to discuss the matter further, and I will be happy to have him along if he wishes to be included in that delegation.

I join colleagues in sending condolences to the Leader of the Opposition and his family at this sad time.

Only four months ago, the Government said publicly to residents in Hampshire that Naomi House children’s hospice in our area would continue to receive support at a difficult time, when it had lost money through the collapse in the Icelandic banking system. Why has that promise of help now been withdrawn?

I do not accept that the Government made a promise of financial help to Naomi House in particular, but efforts are being made. I have had discussions with the Minister of State, Department of Health, my hon. Friend the Member for Corby (Phil Hope) about Naomi House to try to broker a local solution with the strategic health authority. Discussions are continuing in relation to Naomi House.

I know that many hon. Members are deeply saddened by today’s news about the Leader of the Opposition.

The Parliamentary Secretary has already mentioned the process of administration that is taking place with Kaupthing Singer and Friedlander. Many of the depositors with savings above the £50,000 financial services compensation scheme limit have had their deposits returned to them in full. In addition, the Government are fully covering deposits through the online Edge accounts. Why are those depositors being treated so generously when the 27 charities stand to lose every penny of their £50 million of savings? Will the Parliamentary Secretary add my concerns to those of other hon. Members when he meets Treasury colleagues—hopefully—to take up the issue on behalf of those who have raised anxieties?

It is important that we do not get into too much scaremongering and talk about charities losing every penny. A process of administration is taking place and, although it takes time, it is not the case at this stage that those charities have lost the sums of money that were invested in the bank.

I draw the hon. Lady’s attention to the words of the head of lending at Charity Bank. He said:

“Any charity that has funds stuck with Icelandic Banks, and is watching its cash flow slowly drying up, is unlikely to be an attractive proposition to a commercial bank in current market conditions. We are part of the banking sector but as a charity we also want to be part of the solution.”

I therefore encourage charities to look elsewhere also for opportunities to cover any shortfalls while the administration process is under way.

On behalf of the Conservative party, I thank the Parliamentary Secretary and other hon. Members who have expressed sadness at the death of Ivan Cameron. His was a tragically short span of life, but one filled with a great deal of love. I am sure that my right hon. Friend the Member for Witney (Mr. Cameron) will draw strength from the House’s condolences.

Until now, the Treasury has done nothing for a significant number of charities, which have lost money in the Icelandic bank failure, so charities such as Naomi House face having to cut back their good work just when it is most needed. Let me make the Parliamentary Secretary an offer. We support the principle of a short-term Treasury loan fund to help sound charities, which face genuine hardships as a result of lost bank deposits. Will he work with us to develop cross-party consensus on a measure that will have minimal cash-flow impact on the Treasury and deliver real help to a vital sector of society?

I welcome the hon. Gentleman’s interest in the matter, but we need to separate the budget from the issue of help in the short term. I have already made it clear that there are attempts in the case of Naomi House to look at brokering a local solution. Those discussions are ongoing and we will be carefully monitoring the situation of charities more generally.