Government proposes new credit insurance top-up plan

By Hayley Brown

- Last updated on GMT

Related tags Credit insurance International trade Proposal Proposals

Government proposes new credit insurance top-up plan
Officials move quickly to shore up UK export market in response to industry criticism

The government is looking to introduce a ‘top up’ scheme for exporters who are experiencing a reduction in credit insurance. Its proposals come after the Department for Business, Enterprise and Regulatory Reform (BERR) came under fire for not offering enough support struggling companies.

At the Federation of Bakers' annual conference last month John Cridland, deputy director general of the Confederation of British Industry, said: "The government needs to do more on trade credit insurance."

According to Cridland, half of the firms the CBI had recently surveyed claimed obtaining credit insurance was still a problem, while three-quarters said availability had worsened in the past three months.

The government's suggested Export Credit Reinsurance Scheme is said to be based on similar principles to the £5bn domestic Trade Credit Insurance scheme offered by BERR, announced in the 2009 budget. Its aim was to offer manufacturers supplying within the domestic market the chance to top-up reduced insurance cover.

The proposal comes after the government was criticised for not extending support to exporters. The Food and Drink Federation said: "A lot of our members export products, so we were highly disappointed to see that the top-up scheme did nothing to help them. For this reason, we would welcome any initiative to help exporters that have had their credit insurance reduced."

The government is also proposing to introduce a Letter of Credit Guarantee Scheme to help exporters, either as an alternative, or in addition to, the new proposal for exporters. It will offer domestic banks a guarantee of payment issued by banks in other countries, supporting trade contracts between UK exporters and their customers overseas.

"We are considering a proposal for confirming letters of credit, and we intend the Export Credits Guarantee Department (ECGD) to operate it," confirmed the parliamentary undersecretary of state for BERR, Ian Pearson.

"The plight of UK exporters must be addressed, and that is why we are considering that proposal along with other measures that might be implemented to help our exporters," he added. "I am keen that we should move on with the proposal and get it implemented as quickly as possible."

Susan Ross, chair of British Exporters Association, said the association had been lobbying for a government-backed scheme to help exporters: "Businesses are suffering from low demand at home and abroad for their products and services. Government and private sector service providers need to support exporters so they can capitalise on opportunities created by the weak pound."

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