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Budget may offer lifeline.


TEES Valley manufacturers worried about getting paid for their goods on credit hope to be offered a lifeline in next week's Budget.

Chancellor Alistair Darling is understood to be preparing to underwrite supply chain insurance, which protects suppliers against the risk they will not be paid.

Business Secretary Lord Mandelson has been negotiating with insurers in an effort to ease the restrictions which have threatened to put many smaller suppliers out of business.

The scheme is believed to be the centrepiece of initiatives Mr Darling will announce in Wednesday's Budget. It is understood the Government will guarantee insurance for medium-risk businesses whose cover has been reduced but not withdrawn.

Manufacturers' organisation the EEF has been campaigning on the issue for months. A recent EEF survey showed two-thirds of manufacturers had suffered from the reduction or withdrawal of credit insurance.

EEF North East external affairs adviser, Tony Sarginson, said: "Government must slow this process, guaranteeing to top up any coverage that's been reduced.

"Manufacturers need a temporary patch to protect supply chains until demand picks up and cash flow problems ease and they need this to be put in place quickly." Other local business leaders have backed Mr Sarginson's call for action.

Chris Beaumont, chair of the Tees Valley North East Chamber of Commerce, said the Government should "look very urgently" at underwriting credit insurance for businesses struggling to cover their risk.

Alastair Thomson, Tees Valley chairman of the Institute of Directors, said the move would be "a 6 to good idea" but the Government would need to think "very carefully" about how it would allocate the funds.

He said: "Who decides what the premiums are? To do it properly, the Government has to look at the whole supply chain." Many firms have seen their insurance cut or faced big premium rises in the recession. Without insurance, some suppliers have demanded cash on delivery, which has spread cashflow problems along the supply chain..
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Publication:Evening Gazette (Middlesbrough, England)
Date:Apr 16, 2009
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