By Claire Racine

The Government is “turning its back” on charities since it refuses compensation for charities caught up in the banking crisis, warned Peter Hepburn, co-chairman of Save Our Savings (SOS) and chief executive of charity Cats Protection.

SOS, an action group that represents 30 charities that had funds deposited in Kaupthing, Singer and Friedlander, was outraged when they found out that they would not receive any compensation despite the Treasury Select Committee’s report recommending that charities be compensated.

Before making its recommendation, the Committee, consisting of MPs from all parties, scrutinised documents and reports and listened to evidence from all quarters and many experts. However, the report “has been blatantly ignored by those in power,” Hepburn said.

The Government’s aim should be to regulate the banking system and protect depositors, Hepburn added. "The Government has failed in the case of charities, which have been left to suffer the consequences and are consequently extremely angry at the Government."

SOS co-chair, Khalid Aziz, is equally disgusted with the Government’s refusal to “do the right thing.”

Furthermore, Aziz worries about the many inconsistencies and inequities in the government’s approach to compensation.

“Just last week we heard that the Christie Hospital in Manchester is to receive compensation via NHS North West, following contact with Downing Street and submission of a petition to Number 10,” said Aziz, chairman of Naomi House Children’s Hospice.

“Whilst we are pleased for the Christie, I feel this raises serious questions as to whether the Government has acted in an even-handed way in its approach to compensation.”

Adding his unhappiness to the decision, Stuart Etherington, CEO, NCVO said: "At a time when charities need all the funds available to them, it is shocking that the Government has decided to reject the recommendations of the Treasury Select Committee. The individual charities affected will feel very let down by the decision.”

SOS, which is led by Cats Protection and Naomi House, includes a broad spectrum of charities that represent a wide range of causes and collectively has around £50million at stake. The group was formed to increase awareness of this issue and to ensure that charities have a bigger voice as they campaign for the return of their funds.

“SOS represents a wide range of good causes that simply do not deserve to be treated with such disregard,” Hepburn said.

“Society relies on charities for help in so many ways and sadly this decision seriously compromises this vital work.”