The bank of a failed Christmas club which has been heavily criticised for its role in the scheme's collapse today pledged to donate £2 million to help families who have lost their festive savings.

Halifax Bank of Scotland (HBOS), which is the banker to European Home Retail (EHR), the parent company of the hamper firm Farepak, said that it was right to help its customers through difficult financial circumstances.

Critics of HBOS, which announced half-yearly pre-tax profits of £2.65 billion, say that it could have done more to prevent the collapse of its customer. The bank said today that it had been supportive of the company and denied that it was taking Farepak customers' money to reduce EHR's overdraft.

The donation to the independent Farepak Response Fund is only a fraction of the estimated £27 million to £40 million that has been lost by the 150,000 people who invested their savings in the Swindon-based firm.

However, retailers have rallied round to support the families. Leading Christmas hamper supplier Park Group, which was founded by the former Everton chairman Peter Johnson in 1967, announced that it was donating £1 million in high street shopping vouchers to the fund.

Supermarket giant Tesco and retailer Marks & Spencer have pledged to contribute £250,000, while Morrisons is donating £150,000. Sainsbury’s and John Lewis agreed with Farepak’s administrator that customers who were saving for their vouchers should be able to receive 25 per cent of the value of their total savings.

And yesterday, Ian McCartney, the trade minister, urged every MP to stump up at least £165 - a day's pay - as he announced the creation of the relief fund during a debate at Westminster Hall. MPs rounded on the firm and Sir Clive Thompson, chairman of EHR, was branded a "modern-day Scrooge". Some MPs called for a protest outside HBOS's headquarters in Edinburgh.

Peter Hain, the Northern Ireland and Welsh Secretary, was one of the first MPs to confirm he would be making a donation to the fund.

"The establishment of the Farepak Response Fund is an important step towards helping families in very difficult circumstances, and I am pleased to pledge my support by donating a day’s salary to the fund," he said today.

Alistair Darling, the Trade Secretary, called last month for an inquiry into how Farepak collapsed.

Farepak, which was set up in 1968, allowed families, many on low incomes, to save money over a 12-month period to buy vouchers to spend at retailers like Argos and Woolworth's as well as on hampers and food.

The scheme was not officially regulated and families who invested in the scheme have found they have no legal right to compensation. They are now demanding to know how a once successful company such as EHR, which made £6 million profit last year, could end up in administration and why it continued to accept money from customers months after it ran into difficulties.

Both EHR and Farepak were placed into administration on October 13 after HBOS bankers rejected rescue proposals.

Customers would pay money monthly into Farepak, which then banked the money. A separate company, Choice Gift Vouchers, would extend credit by issuing the vouchers, expecting Farepak to pay them back at a later date.

But in February, Choice Gift Vouchers went into administration after another Christmas club, Family Hampers, went bust.

This collapse led to retailers demanding a change in the way clubs work. They no longer wanted the system to be run on credit; instead Farepak would have to pay for vouchers upfront.

This led to EHR announcing in July that it needed to increase its borrowings and, when this was not possible, its shares were suspended the following month.

The company had already been in a precarious financial position since Farepak’s acquisition of a toy business called DMG which led to a write-down of its assets.

Another key issue was that under this unregulated system there was no compulsion to ringfence the money collected. So, in effect, customers’ money could be used to bankroll the company.

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