Brennan says no to short-term Iceland loan fund

Third sector minister rejects Tory plan in favour of local solutions

Charities minister Kevin Brennan has rejected a proposal from his shadow, Nick Hurd, to set up a short-term loan fund that will help charities facing hardship after recent banking collapses.

In a parliamentary debate on Wednesday, Hurd called on Brennan to "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".

Earlier this week, Brennan wrote to Hampshire-based children's hospice Naomi House, which had £5.7m in the Icelandic bank Kaupthing Singer & Friedlander when it collapsed in October, to say the Government would be unable to offer it any direct financial assistance (Third Sector Online, 25 February).

But Brennan told the Commons he was working with health minister Phil Hope, the former charities minister, to "broker a local solution" with Naomi House's local strategic health authority.

He said: "Those discussions are ongoing and we will be carefully monitoring the situation of charities more generally."

He said he had agreed to meet a delegation of MPs to discuss the plight of charities such as Naomi House that did not qualify for the Government's financial services compensation scheme.

Brennan added: "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."

He called on charities with funds stuck in Icelandic banks to apply to sector-friendly institutions such as Charity Bank to cover any shortfalls in the meantime.

Brennan also promised to explore a suggestion from Labour MP Derek Wyatt to set up a national vocational qualification in volunteering for schoolchildren.

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