Firms go bust as government fails to tackle credit insurance
Building firms are going bust because of the government has failed to come up with a credit insurance rescue package, according to the Guardian.
Michael Ankers, chief executive of the Construction Products Association told the paper: "Many of the biggest construction companies are now effectively self-insuring themselves, but the real risk is the smaller companies who can't afford to lose cashflow."
He met ministers last week. "The government has indicated they are looking to develop a scheme and we are urgently waiting to see results," he said.
Ian Cheshire, chief executive of B&Q owner Kingfisher, slated credit insurers. "They took money off people for years, but when the climate changes they withdraw," he said. "How does that business model work?"
Cheshire said B&Q did not yet have a serious problem with suppliers being refused cover, which he said was down to B&Q being "big enough and ugly enough" to cope with the downturn. But he added: "I genuinely think this is an issue. By withdrawing credit insurance they are making things much worse."
The Guardian also quoted Chris Pateman, managing director of the Builders Merchants Federation. He said: "Businesses trading successfully for several years find a fax from their credit insurer saying that as of today there is no cover ... The ABI insist their members have not unilaterally decided to exit the construction sector. That's not how it feels."
