A couple of surveys from EEF this year have show that the reduction and withdrawal of credit insurance has been a major problem for a majority of manufacturers. We lobbied hard in advance of the Budget in April and HM Treasury listened and put in place a government backed top up scheme for companies that had had cover reduced.
Take up of the initial scheme was low, so again government listened, and the eligibility criteria for the scheme were backdated from April 2009 to October 2008. Further changes to the scheme have been announced today.
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The price of the top-up cover will be cut from 2% to 1%.
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The £20,000 lower limit on cover will be removed.
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The upper limit on top-up cover will be doubled to £2 million.
No corresponding increase in the money available for the scheme has been announced - but as we said last time the £5bn announcement was more headline grabber than assessment of need. Any further expansion of the scheme that helps manufacturers is obviously a good thing, given some of the risks associated with a reduction in cover. It should provide some breathing space for companies starting to see a trickle of orders come through. But those that have seen a complete withdrawal of credit insurance will still be stuck.
The government has tried to get this off the ground and increase uptake, now we need to see similar moves for companies facing problems with credit insurance on exports.