Darling opts to give credit where it is due

The channel has applauded Chancellor Alistair Darling’s attempt to safeguard businesses’ dwindling credit lines through a ‘top up’ trade credit insurance scheme.

Unveiling his 2009 Budget to the House of Commons, Darling confirmed the government will do much more to help firms with cashflow problems.

From next month until the end of this year, UK businesses will be able to purchase six months’ ‘top-up’ insurance from the government if credit limits on their UK customers are reduced. The qualifying window will be backdated to include any reductions since 1 April.

Suppliers can purchase government-backed insurance to either restore cover to the original level, double the amount they are able to obtain from the private sector, or £1m ­- whichever is the lower.

The total cost of insurance provided under the scheme will be capped at £5bn.

Phil Jones, sales and marketing director at printing vendor Brother UK, said: “It is only right that our government should be providing support for perfectly respectable businesses that have been treated unfairly by their credit insurers.

“Let us just hope that this new initiative has arrived in time.”

Eddie Pacey, director of credit at distributor Bell Micro, said the move helps to alleviate pressure on the channel. “This is a welcome move and will help SMEs in a time when insurance is coming down, but it will not solve all of the channel’s problems,” he said.

Derek Walton, finance director, Northern Europe for distributor Magirus, agreed that the scheme would give resellers “breathing space” to survive the recession.