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Farepak

I shall be very brief, Miss Begg. We have had an excellent debate, and I congratulate the hon. Member for South Swindon (Anne Snelgrove) on initiating it. The issue has touched the hearts of hon. Members and of people throughout the United Kingdom. I shall focus on how the problem arose. The industry is unregulated. It falls within the retail sector, not the savings sector, but in principle it operates in a similar way to credit unions. The hamper industry depends on each company fulfilling its part of the bargain. In February this year Family Hampers went bust. The system allowed customers to pay in their savings, the company would bank the money and vouchers were issued to customers by a separate voucher company; the company then invoiced the Christmas club, and the shops invoiced the voucher company. When Family Hampers went bust, Choice Gift Vouchers went into administration. The major store groups decided that they had had enough of that—they were £55 million out of pocket. They decided that there should be no more credit and that vouchers should be purchased up front. That led to a funding crisis at European Home Retail, the parent company, and its shares were suspended in August. However, EHR was using Farepak to fund its own deficit, and each month the customers’ savings were being raided like a piggy bank. Why was that company not put into administration until October? HBOS was still raking in savers’ money to fund the EHR overdraft. The worst thing, however, is that earlier in October the non-Farepak rump of EHR was sold off for £34 million in cash. Where has that money gone? How is it possible to drain a subsidiary of cash and then sell it, leaving tens of thousands of people being owed money?