The government’s credit insurance ‘top-up scheme’ is failing to kick start cover in the construction sector, according to the Construction Products Association (CPA).
The scheme was unveiled in the last budget in April, with the aim of countering the withdrawal of cover by commercial insurers from huge numbers of building and related businesses. But a new CPA survey has found that take-up of the initiative is very poor and the scheme itself is not up to the job.
Of the 100 companies surveyed, only one had used it and it found the insurance ‘very expensive with very limited cover’.
“It’s clear from this survey that the scope of the scheme and its cost has made it unattractive to all but a very few companies in the construction products industry,” said CPA chief executive Michael Ankers. “We’ll discuss with government ways in which it might be modified, but unless it is prepared to extend the scheme beyond the end of the year, any changes are unlikely to have any really beneficial impact.”
British Woodworking Federation chief executive Richard Lambert said that he was not surprised by the CPA’s findings, following feedback from his own members.
“I don’t know of anybody who’s found the government scheme any use,” he said. “It’s heart was in the right place, but as soon as it took the decision that it wouldn’t insure anything the commercial insurers wouldn’t cover, it was bound to unravel.
“It needs to find a way of underwriting businesses where other credit insurance won’t be offered. Anything else and it becomes a self-reinforcing circle.”
Mr Lambert predicted that in the future UK business might have to cope with less credit insurance overall, or even none as in the US market.
“At the moment it looks as though business will have to be much more selective in credit insurance cover and more aggressive in risk management, as they are in America.”
Mr Ankers said that the “absence of an adequate system of credit insurance” would slow down recovery in construction which could hamper the wider economy.