Insurance set to figure in Budget

THE government is understood to be working on supply chain insurance to help businesses that have been hit by the uncertainty around credit insurance.

The scheme, which could be unveiled by Chancellor Alistair Darling in next week’s Budget, is designed to help small and medium-sized businesses that have seen supply lines threatened by a reduction in credit insurance.

Thousands of businesses have been affected as insurers have increased premiums and refused to cover some firms in high-risk sectors such as contruction.

The complete withdrawal of the insurance, which protects companies that supply goods on credit against the risk that they will not get paid, has left some companies unable to trade.

Industry groups such as the EEF manufacturers’ organisation have been lobbying for government help for months.

But it is understood the government’s scheme will target medium-risk businesses and only offer guarantees for companies that have had cover reduced rather than withdrawn.

Topps Tiles and Focus DIY have both criticised their insurers after facing the withdrawal of cover.