The Confederation of British Metalforming (CBM) has urged the government to reconsider their decision on the Trade Credit Reinsurance scheme, or risk damaging the industrial recovery.
The CBM, which represents over 200 manufacturers, has been pushing the government to extend support until the end of the year to assist companies in their recovery from Covid-19 pandemic.
The scheme, which ensures that trade credit insurance coverage and credit limits are maintained during the pandemic, helping businesses to trade with confidence, is currently due to finish at the end of June. Businesses are already at the mercy of rising material prices, pandemic debt, and the winding down of the furlough scheme.
Steve Morely, President of CBM has voiced his concern, fearing the removal of this scheme will see many insurers remove credit insurance that covers thousands of manufacturers from the threat of bad debt.
Despite the government stating they would, ‘continue to work closely with policy holders and their clients to understand their insurance needs’, many members are already receiving emails informing them that they are no longer covered.
Steve explained: “This is the biggest threat to industry’s recovery, it’s as simple that. There are lots of positive signs around volumes, new car model introductions and of course the emergence of the UK’s electrification industry. However, firms are still finding it really tough and they need protection against bad debts from their customers and their invoice discounting facility, which can be affected by the removal of credit insurance.
“The Government scheme gave insurers the confidence to cover manufacturers and we are already seeing examples of these same insurers withdrawing cover now that the deadline of 30 June approaching.
“We were told that we can’t get sector specific support, which seems crazy considering all of the rightful assistance retailers have received. It’s not a case of asking for handouts, just a level playing field that gives firms the opportunity to trade their way out of the recovery.”
Rowan Crozier, CEO of Brandauer, one of the UK’s leading metal pressings and stamping specialists said: “The automotive supply chain has struggled to retain full cover even with existing Government support, so the removal of the scheme at the end of this month will put further pressure on an already strained sector.
“Cash is king and the absence of bridging cover will mean negotiating different terms with both customers and suppliers, resource many firms do not have when trying to contend with the demands of Covid-19 and Brexit paperwork.
“The Government has a few weeks to step back from what will be a massive mistake and maintain the Trade Credit Reinsurance scheme for the remainder of the year, keeping in place a vital tool that is helping industry navigate a volatile economic phase.”
Steve Morley concluded: “The cynics in our sector have already pointed out that insurance executives are not eligible for bonuses whilst being underpinned by HM Treasury, so there appears no appetite from the insurers to support our rallying call for an extension.
“There’s still time for Government to change their mind and give industry the breathing space it needs to complete its recovery.”
Images courtesy of Confederation of British Metalforming and Brandauer