Retailers attack £5bn safety net move

Retailers on Wednesday night criticised the government’s £5bn supply chain insurance scheme as “too little, too late”.

The scheme, which is due to run for six months, will top up cover for companies whose credit insurance has been reduced but not withdrawn. It will be available only to companies that had their cover cut after the beginning of this month.

Lord Mandelson, business secretary, said the scheme would provide “much needed breathing space for businesses suffering as a result of the reduction in trade credit insurance”.

But the British Retail Consortium, the trade body for retailers, said many companies would be frozen out of the scheme because their cover was cut before the beginning of this month.

Jane Milne, BRC business director, said: “A top-up scheme is much needed but this is too little, too late.”

She added: “Matching the trade credit insurance that private insurers are willing to provide is vital to help-ing fundamentally sound businesses weather the recession. But …this safety net will be denied to companies whose cover was cut before April 1, meaning the plight of many is being ignored.”

Bill Grimsey, chief executive of private equity-owned Focus DIY and a strong critic of credit insurers, said the scheme did nothing to help those companies that had had their credit insurance withdrawn altogether.

“[Alistair] Darling has missed an opportunity to establish real help for UK companies supplying UK companies,” he said.

“That has now left us and many other companies out in the cold, and created an uneven playing field with competitors who have had their cover reduced.”

One executive at a company that supplies retailers questioned whether the scheme would provide enough cover in the build-up to the peak Christmas season, when there was a spike in the volume of goods ordered.

But insurers, which have also been involved in the development of the scheme, defended the initiative. Shaun Purrington, regional director of Atradius, one of the leading credit insurers, said the initiative was designed to cover companies in the “grey zone” where cover was reduced.