Iceland crisis freezes charity work

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By Ray Furlong BBC News Sue George says the cuts have had a massive impact on her life

The collapse of Iceland's banks has affected some British charities who had saved with them. One is Naomi House Children's Hospice in Hampshire which has had to cut vital services.

Sue George and her eight-year-old daughter Holly are arguably two of the most innocent victims of the Icelandic banking crisis.

They live in Beedon, in Berkshire, and until recently knew they could rely on a hospice-at-home service run by Naomi House. Now, they can't.

Naomi House recently had to slash services, two months after it found it could not access its £5.7m reserves in Kaupthing, Singer and Friedlander (KSF) - the UK subsidiary of Iceland's biggest bank.

"It has a massive impact on your life," says Sue. "If there's an emergency, I can't ask a friend or neighbour to look after Holly. She needs qualified medical care."

Holly, 8, suffers from a life-limiting lung condition. Recently, Sue needed to leave her after her husband was himself rushed to hospital.

"Naomi House immediately despatched someone to our house," she says. "You need to have that.

"They have limited capacity and are often full. Only an outreach programme enables them to help in emergencies like this."

Selling assets

The hospice itself is a warm, welcoming place. On the walls there are pictures drawn by the kids, including a Christmas tree made with their footprints, painted in green.

There's a friendly atmosphere around the comfortable sofas as staff and children sing the Dingly-Dangly Scarecrow.

Last year's accounts show it cost £3.8m to run Naomi House, which had an income of £4.7m. In this context, the sum at KSF is huge, and Khalid Aziz, chairman of the board of trustees, fears further cuts may be around the corner.Mr Aziz fears Naomi House will have to sell vital assets

"The crunch will come in February," he says.

"If we don't get some clarity on when we're going to get this money back - how much we're going to get back - we'll be forced to sell assets that generate income for us.

"Property bequeathed to us, shares that generate dividends - we don't want to be forced-sellers in this market."

He also rejects the idea that the hospice is in any way to blame.

"We started saving with a long-established British bank - Singer and Friedlander - in 2005. It was then taken over by Kaupthing in Iceland, but the bank was still regulated by the Financial Services Authority in Britain.

"If there's any culpability here, it lies with the FSA."

Today, the creditors and administrators of KSF held their first meeting at the Café Royal on Regent Street in London. There Naomi House joined 26 other charities in launching "Save our Savings" and calling for government aid.

'Serious stuff'

The process of recovering funds is expected to take months, if not years.

Most of the other charities will not come forward for fear of being abandoned by donors. Some of the smallest ones are said to be close to collapsing altogether.

Another charity has declined to be named because it doesn't want to alarm its beneficiaries. It provides housing for pensioners.

Khalid Aziz said that in some cases "lives are at risk".

"This is really serious stuff," he added.

Dominic Sullivan from Cats Protection, which had £11m at KSF, said: "Charities that have been affected by the collapse of KSF are now working together so that we can present a united front in the battle to secure the recovery of charitable funds." It's a question of what's morally right. Someone should help us Sue George <a class="" href="/1/hi/england/hampshire/7749696.stm">Hospice cuts due to Iceland cash</a>

The Charity Finance Directors Group, an umbrella organisation, says it knows of 49 charities which had assets in various Icelandic banks or their subsidiaries.

The group's chief executive, Keith Hickey, has had four meetings with government ministers in the last month, but says he's received nothing but vague assurances.

"We've suggested to the government that they look at an interest-free loan-guarantee scheme, but we've had no response to that," he says.

"Government talks about working with the sector and delivering with the sector, so we feel we have a good case in talking to them to get that kind of support."

'Morally right'

The government denies that it has abandoned charities.

"We're absolutely committed to helping charities that face difficulties both as a result of the recession generally and as a result of the Icelandic banking crisis," says Kevin Brennan, minister for the third sector.

"We had a series of meetings with leaders from the charitable sector, including a summit last week, at which we committed to producing an action plan more broadly to assist charities in the recession in the New Year."

Charities will be looking for something concrete to come from that plan and so will Sue George.

"It's a question of what's morally right, where children are life-limited and in many cases coming to the end of their lives," she says.

"For their families to be in a situation where we can't have emergency crisis care is not right. Someone should help us, and only government can."