Dear Editor, Credit insurance, taken out by companies as security against potential bad debts, is vital to the free flow of goods and services. It enables smaller companies to take calculated risks with large customers and for some SMEs it’s a condition of their overdraft facilities.
Since the end of last year, however, insurers have been steadily withdrawing or reducing cover on thousands of companies.
The announcement on ‘top up’ credit insurance in last week’s budget, however, will do very little to help businesses in our region as the scheme seems to have been designed to exclude virtually anyone supplying large manufacturing end users.
Crucially it will only apply to insurance cover that has been reduced since April.
For those companies fortunate to have ‘reduced cover’ in place it is likely that the reduction would have taken place well before the beginning of this month.
Also the ‘top up’ scheme only applies to business transacted in the UK, so will do nothing to help exporters; it will only be valid for six months and there is a hefty premium attached plus, of course, tax.
The British taxpayer shouldn’t act as an insurer against companies’ potential bad debts but it seems reasonable to me that where the credit insurers have reduced, not withdrawn, cover that the Government should intervene in some way to inject some confidence back into the system.
The announcement in the budget last week will do nothing to reassure businesses that this Government has the slightest understanding of how the real economy works.
Coun Philip Parkin
The Council House
Birmingham
