CPA slams government’s insurance top-up scheme after it finds only one company has taken advantage of it since April launch
The Construction Products Association has attacked the government’s credit insurance top-up scheme, claiming one in five companies is now trading without cover.
In a survey of 100 companies, the CPA found only one company had taken advantage of the scheme since it was launched in April’s Budget.
Under the plan, the government will match private sector trade credit insurance for a temporary period, if insurers reduce cover of a business.
However, the company in question said it was “very expensive with very limited cover”. Others were unable to take advantage of the scheme because cover had been reduced to zero.
Michael Ankers, the CPA’s chief executive, said: “Along with other representative bodies, we fought hard to persuade government to introduce a top-up scheme, but it is clear that by the time this was announced in the April Budget, much of the damage had already been done.”
The survey found 95% of companies had seen credit insurance totally withdrawn from at least some of the companies they supply, and where insurance has been maintained, the average reduction in cover is more than 30%.
Ankers added: “As a result of this, nearly one third of companies have closed or reduced accounts, while 20% are having to trade without credit insurance with all the risks that this brings. For smaller companies the problems are particularly severe and they have been forced to stop supplying customers if credit insurance is not available for fear that one bad debt would bring the company down.”
The CPA will now try to persuade the government to modify the scheme so it becomes more effective.