General
Top-up scheme remains too pricey
19 Sep 2009
The government's credit insurance top-up scheme remains too expensive in the eyes of most channel players, despite recent improvements to the programme.
In a last-gasp attempt to improve disappointing takeup of the £5bn programme before it ends in December, the government has halved the price of top-up cover to one per cent.
With ETC the only major IT distributor known to have run with the scheme, channel takeup since it went live in May has been poor. Figures show that only 52 UK firms have benefited from the scheme to date.
But distributors argue that the latest modifications will do little to help an IT channel working on one per cent profit margins.
Jon Bunyard, general manager at distributor CCD, said he still had "zero intention" of getting involved.
"The government is still on a different planet on this deal - one per cent of revenue is more than we make as an organisation.
"For the plan to appeal, it would have to reduce the price to a level that is competitive with our credit insurance costs," he said.
The government has also removed the scheme's lower limit of £20,000 and doubled the upper limit to £2m to help more firms.
Atradius, which is one of four private credit insurers backing the scheme, welcomed the fact that the government had taken its feedback on board.
Shaun Purrington, regional director of Atradius UK and Ireland, said: "The scheme is now more affordable and offers a broader range of cover, which should increase its appeal to UK businesses, particularly SMEs."
The government had already amended the scheme in June to help firms that had seen their credit insurance cut before its introduction. Eddie Pacey, director of credit at distributor Bell Micro, said the fact that the scheme has been revised twice suggests it was hastily conceived.
"These latest changes are certainly helpful, but they are unlikely to shift our own position very much as the cost remains prohibitive.
"We would only consider it in an extreme situation, and one has not yet fully arisen."