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Councils have angrily challenged MPs who called for charities to be compensated for losing cash in the Icelandic banks fiasco. The Commons treasury select committee's report into the losses, including almost £1bn by councils, argued it was ‘perverse' to reward authorities which failed to protect their investment with yet more money from the taxpayer. It recommended the Government consider the case for providing charities with further statutory guidance relating to the management of a charity's finances and investments. The committee argued charities supported the most vulnerable in society and therefore needed the biggest help. It did not accept that there was a need to provide assistance to the local authorities. Advice offered by financial advisers will now be investigated by the Treasury committee. The Commons CLG committee is expected to release its findings within the next two months. Treasury committee chairman, John McFall, said: ‘At a time when more people than ever are faced with difficult economic circumstances, we believe it is imperative that charities have access to the funds that were provided to them by the public.' But LGA chairman, Margaret Eaton, challenged the report: ‘There must be a consistent and fair approach to compensation. If charities are to be compensated, why should there no relief whatsoever for the council taxpayer? ‘Councils provide vital services to society's most vulnerable people. Councils have asked to be able to pay off any potential losses over a longer period of time than normal. ‘This flexibility would help maintain the support that local people increasingly need in these difficult times, with councils often working with charities and voluntary organisations.'

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WHITEHALL

MPs challenged over payouts to charities following Icelandic fiasco

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