Business Secretary Vince Cable has reversed a decision to consider closing a compensation scheme for Holocaust victims as part of a cost-cutting exercise.

Dr Cable had initially asked Shoah groups for their views on whether to end the Enemy Property Payment Scheme, or find a cheaper way to run it.

The scheme was launched in 1999 to compensate victims and their families who had property confiscated by the Nazis.

But after Jewish groups, including the Board of Deputies and the Association of Jewish Refugees, raised concerns that Shoah survivors could miss out on claiming money, Dr Cable said he would remove the closure option from a six-week consultation that began last week.

Dr Cable told the JC: “The department launched this consultation to consider how best to administer the scheme in the future given its very low take up in recent years. Only one of the three original options included closing down the scheme.

“However due to strong views expressed so far on this matter, I have decided to rule out closing down the scheme and have asked the department to reissue the consultation removing this option."

A source close to Dr Cable said: “The last thing we want to do is offend those who have suffered in the Holocaust. He has immediately taken on board the views expressed.”

There had been 950 claims in the scheme’s first year – worth almost £19 million – there had been 350 since, and only 37 in the past five years. Of those, only eight successfully led to pay-outs, with a combined worth of around £400,000.

It costs £65,000 a year to run the scheme, “bringing into question relative value for money for the taxpayer”, Mr Cable’s department had originally said.

The remaining options include making no changes to the running of the fund, or reducing its operations.

Among the groups and individuals asked to contribute ideas are the Holocaust Educational Trust, Association of Jewish Refugees, Chief Rabbi Ephraim Mirvis, the World Jewish Congress, and Lord Janner, who the consultation document incorrectly identified as “Neville” rather than “Greville”.

The AJR had said it was possible that relatives of Shoah victims may be entitled to make claims but may not know of the fund’s existence.

“To deny them their rightful inheritance would be a travesty of justice and an unnecessary stain on the British government’s otherwise leading reputation in the field of post-Holocaust issues,” a spokesman said.

HET said it was considering its response.

The Business Department said the consultation would continue until March 7 and encouraged interested parties to put forward ideas.