Suppliers keen to see insurance aid in Budget
Apr 16 2009 By Karen Dent, The Journal
MANUFACTURERS worried about getting paid for their goods on credit hope to be offered a lifeline in next week’s Budget.
Chancellor Alistair Darling is understood to be preparing to underwrite supply chain insurance, which protects suppliers against the risk they will not be paid, after many have seen their insurance cut or faced big premium rises in the recession.
Without insurance, some suppliers have resorted to demanding cash on delivery, which causes problems for the customer and spreads along the supply chain.
Business Secretary Lord Mandelson has been negotiating with insurers in an effort to ease the restrictions which have threatened to put many smaller suppliers out of business.
The scheme is believed to be the centrepiece of initiatives Mr Darling will announce in Wednesday’s Budget, aiming to help SMEs survive the recession. It is believed the Government will guarantee insurance for medium-risk businesses whose cover has been reduced but not withdrawn.
Manufacturers’ organisation the EEF has been campaigning on the issue for months. A recent EEF survey showed two-thirds of manufacturers had suffered from the reduction or withdrawal of credit insurance.
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