Naomi House Children's Hospice

Part of the debate – in the House of Commons at 5:25 pm on 4th December 2008.

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Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families) 5:25 pm, 4th December 2008

I thank you, Mr. Deputy Speaker, for giving me the opportunity to hold this debate, and I am grateful to the Exchequer Secretary for coming along to respond to it.

Naomi House was badly hit in the recent Icelandic banking crisis. The charity had a deposit of £5.7 million with Kaupthing Singer & Friedlander, which had its assets frozen two months ago. Naomi House is a children's hospice that supports hundreds of families with children who have illnesses that will shorten their lives—terminal illnesses. Those families come from throughout Hampshire, the Isle of Wight, Dorset, West Sussex, Berkshire, Wiltshire and Surrey. To deliver its service, the hospice relies on trained doctors and nurses as well as on the efforts of more than 400 volunteers. Some 1,400 corporate organisations, many in my constituency, support the hospice, including the Automobile Association and Winterthur Life.

Singer & Friedlander, an old, established British bank taken over by the Icelandic bank Kaupthing in 2006, was regulated by the Financial Services Authority. When the Government acted to freeze its assets, it was clear from the start that they did not intend charities, large or small, to suffer as a result. Indeed, in one Prime Minister's questions, the Leader of the House, who was standing in for the Prime Minister at the time, stated that there would be 100 per cent. protection for small charities and that the Government were

"taking steps to protect larger charities by freezing the assets of the Icelandic banks and by lending £100 million while the unfreezing of those assets is sorted out."—[ Hansard, 15 October 2008; Vol. 480, c. 790.]

That was an encouraging response, in which the Government articulated specific support. Indeed, on another occasion the Leader of the House, when questioned specifically on the plight of Naomi House, stated in the national media that direct support for charities would be in place, that the Government would do everything that they could to help charities and that they would not leave charities on their own. More recently, the Parliamentary Secretary, Cabinet Office, Kevin Brennan, made it clear that the commitment to helping charities through this crisis was still very much alive and well.

The problem is that we are now two months on from when the assets were seized, and Naomi House has yet to see any of the promises bear fruit. It has seen confirmation that it is classified as a large charity under FSA rules, which means that it will be placed in a queue with other wholesale investors such as local authorities. In no way have the specific difficulties faced by charities been recognised, particularly in respect of securing borrowing to try to get them through this difficult time.

At the creditors' meeting on Monday it was clear that recovering the money that has been lost will be an immensely long and drawn-out process, with no certainty about the outcome. Naomi House has also learned that the Office of the Third Sector will produce an action plan, but that is promised only for some time in the new year. Recent comments from the Minister with responsibility for the third sector at the National Council for Voluntary Organisations recession summit made it clear that the action plan will look more broadly at the economic downturn faced by charities, rather than at the banking crisis in particular. Frankly, despite specific approaches to the Prime Minister, the Department of Health and the Charity Commission, there has been radio silence from the Government about how they will keep their undertakings real and alive for Naomi House.

The problem faced by Naomi House is that one third of its assets—£5.7 million—are frozen. For any organisation, that is a significant and overwhelming financial crisis. As a direct result of that, on 25 November Naomi House was forced to suspend its at-home service for terminally ill children in my constituency. The hospice-at-home outreach programme provided unique and much-needed support for families, and it was due to be rolled out into other areas of Hampshire, yet now the future of that service is bleak, and it has been suspended indefinitely. Two months may not be a long time for a Minister or Department, but it is a very long time for a charity that is almost completely reliant on its own financial resources. The trustees have been forced to take this action to safeguard other services. Without some clarity today, there may have to be further announcements.

This matter cuts across other Departments. I know that the Parliamentary Secretary, Cabinet Office, is well aware of the issues that face Naomi House, but his recent comments serve to illustrate the fact that a one-size-fits-all financial solution will not necessarily work in this case. I hope that the Exchequer Secretary can respond to that point. The hon. Gentleman suggested that the Department of Health, local authorities and primary care trusts could offer some way forward in terms of additional short-term funding, but the local situation in Hampshire for Naomi House means that it has no local authority contracts or PCT funding and receives only £300,000 from the Government through the Department of Health. In the context of a yearly turnover of £2.5 million, that is a tiny amount of money, but there is no indication from the Department that it is going to increase it in the near future, unless the Exchequer Secretary can advise me otherwise.

The time has come for the Government to act decisively by clearly stating the support that Naomi House will receive. It is doing what it can to help itself. It helped to establish the Save our Savings group—a group of charities that are affected in the same way by the Icelandic financial crisis—and has secured a seat on the Kaupthing Singer & Friedlander administrator's creditors committee. However, the time has come for the Government to do their bit, too, and to show that they will follow through with some tangible support, as they promised when this crisis started.

Going back to the promise made from the Front Bench by the Leader of the House on 15 October, what steps are being taken to protect larger charities, particularly given the protracted nature of the administrative process? The NCVO has been working hard to support the sector and pressing for a loan facility. What is the situation with regard to loans? Providing such support until charities are able to recover their own money may be just the sort of help that can stop any further cuts to important services such as those that Naomi House provides. The Leader of the House said that that money would be available, but we are still to hear any details.

There are some specific differences in the Naomi House case that suggest that the Government's general approach may not provide the support that is intended. Will the Exchequer Secretary therefore undertake to look into the problems that it faces as a special case?

The Government may want to consider, perhaps not now but in the medium term, whether the FSA rules on eligibility for compensation, which use the Companies Act 1985 to define what constitutes a small charity, are as robust as they need to be. Leaving Naomi House out in the cold cannot be anything other than an unintended consequence of how the current regulations are drafted.

Will the Exchequer Secretary undertake to join her colleague, the Parliamentary Secretary, Cabinet Office, who has offered to meet representatives from Naomi House to secure a cross-departmental solution to the problem?

In conclusion, Naomi House works throughout seven counties, and in constituencies that are represented by Members of Parliament on both sides of the House. It provides a service that the NHS does not. It supports families of terminally ill children in a way that no other service does. A petition on the 10 Downing street website, calling for Government assistance, was set up by local campaigner Steve Brine and now has more than 4,000 signatures, which shows the strength of feeling in Hampshire and beyond about the plight of Naomi House.

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