The government has refuted rumours that its package of measures to help firms hit by reductions in credit insurance coverage may be abandoned.
The Department for Business, Enterprise and Regulatory Reform’s (BERR’s) assurances followed reports that trade minister Lord Davies said the multi-billion pound package might be superseded by other stimulus strategies, such as quantitative easing.
Davies said such measures would help correct credit insurance problems because the extra billions recently pumped into the economy would get credit flowing. Consequently, the number of companies defaulting on payments would decrease - making it less risky for insurers to cover firms.
At last month’s IFE food show at London’s ExCel centre, farm minister, Jane Kennedy also admitted that the government had yet to decide on available help for suppliers struggling to obtain credit insurance.
However, BERR stressed to Food Manufacture that it was still “working in partnership with the credit insurance industry to find a collaborative way to alleviate the pressure on supply chains throughout the UK”
BERR was delaying an announcement, said a spokeswoman, because it wanted to allow businesses “breathing space to reach new arrangements with lenders and suppliers”. It also wanted to give government time to “carry out a full analysis to ensure we deliver the type of help firms need”
But she warned that the government was not planning to offer “blanket protection in situations where insurance is removed - that would not constitute a fair use of taxpayer resources”
Lloyds TSB regional director Roger Brown confirmed that credit insurance was currently more difficult to obtain. He said: “In the past, a lot of export debt was covered by the government. There is probably under coverage of insurance, but the government can’t bail everybody out.”
The Food and Drink Federation has called on the government to “end the media speculation, and give some clarity for food and drink manufacturers as soon as possible”