Cabinet Office written statement – made on 14th October 2008.
Over the last few days, the Cabinet Office has been working actively to determine the economic situation some charities may find themselves facing.
Only a small fraction of a total of £56 billion(1) worth of investment assets held by general charities(2) is invested in Icelandic banks.
As agreed at a meeting between Ministers and charity representatives on
We are working closely with the Charity Commission, the sector's regulator, to support charities who have deposits in Icelandic banks. We are also discussing directly with affected charities their concerns.
Acting on the advice of the Bank and the FSA, my right hon. Friend the Chancellor of the Exchequer last week took action to protect the retail depositors in three Icelandic banking operations in the UK: Icesave, a UK-based branch of Landsbanki; Heritable, a UK-based banking subsidiary of Landsbanki; and Kaupthing Singer and Friedlander, a UK-based banking subsidiary of Kaupthing Bank. Using powers under the Banking (Special Provisions) Act 2008, retail deposits in Heritable and Kaupthing, Singer and Friedlander have been transferred to ING Direct. Savers money is safe and secure. The Chancellor has also guaranteed retail deposits in Icesave in full. The Treasury and the Financial Services Compensation Scheme are working with the Icelandic authorities and their deposit insurance scheme to ensure that depositors in Icesave are paid back as quickly as possible.
The Bank of England has also provided a short-term secured loan of up to £100 million to the London branch of Landsbanki, to help ensure an orderly wind-down and maximize the returns to UK creditors. The Government have also frozen the funds and financial assets held by Landsbanki. This is a precautionary measure to protect UK economic interests and we are continuing to work closely with the Icelandic authorities to ensure a fair process for UK creditors.
We are working with HM Treasury to do what we can to support those organisations with investments in Icelandic banks, and ensure they are in the strongest possible position to protect their investments.
In the light of recent global economic events, the Government are more determined than ever to support the third sector through the upcoming months and years. We are committed to ensuring that charities are supported in resolving any short term issues they may face as well as supporting them in the long term.
We are working closely with sector leaders, representing small and large organisations, and Ministers will co-chair, alongside Stuart Etherington, an upcoming NCVO sector-wide summit to tackle upcoming issues.
A survey released by the Commission this morning has revealed that one in four charities has already put in place measures to deal with the economic downturn. The Commission is keen to provide further advice and guidance for charities and trustees via its helpline and website.
We are confident that the sector is in better shape than ever before to meet the challenges ahead. Its income from Government has doubled over the last 11 years to a total of £11 billion a year.
I will continue to represent the interests of the sector at the newly founded National Economic Council, which will consider the impact of the current financial crisis on the economy as a whole.
(1) General charities are defined as 'private non-profit-making bodies serving persons'. This excludes sacramental religious bodies or places of worship, UK Civil Society Almanac (2008)
(2) UK Civil Society Almanac (2008)