No interim help for charities with frozen accounts

The Treasury has refused temporary funding for charities with money in Icelandic banks

The Government has rejected a suggestion by shadow Treasury minister Mark Hoban to establish a temporary funding facility for charities with money frozen in failed Icelandic banks.

Conservative MP Hoban said the fund would help to keep charities operating until the administrator decided how money from the failed banks would be distributed.

However, Treasury minister Angela Eagle rejected the idea, which came during a Commons debate last week on Naomi House, the children's hospice that invested £5.7m with Kaupthing Singer & Friedlander.

"We do not feel that that would be an effective use of public funding, simply because there is no additional source for such a grant fund to be drawn from," said Eagle.

"The money would have to be taken out of moneys already earmarked for charitable purposes by the Office of the Third Sector, which would mean taking money out of a series of initiatives that have been decided on for strategic reasons, including third sector capacity building, volunteering, public service delivery and social enterprise programmes."

Maria Miller, the shadow minister for children, suggested finding additional short-term funding to tackle the "significant and overwhelming financial crisis" the hospice faced.

"The time has come for the Government to act decisively by clearly stating the support that Naomi House will receive," she said.

Eagle said there were many creditors and many larger charities with problems.

"It is the case that processes of administration have to be gone through and the creditors have a particular queue to go through in law," she said. "There is no option but to go through the process. I recognise that it leads to some uncertainty, and it is too early in the process to tell whether all the money will be forthcoming in the end."

Ray Kipling, chief executive of Naomi House, said he was disappointed by the outcome. "Angela Eagle gave lots of warm words but nothing tangible, and suggested there would be nothing tangible," he said.

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