If the Chancellor really wants to tackle the crunch he needs to help with credit insurance

In pre-credit crunch days, I accepted an invitation to attend a drinks reception at Number 11 Downing Street at which, it was promised, Alistair Darling would be present.

Now in a credit crunch, en route to Downing Street, I mused on what to harangue the Chancellor about. I settled on the “why don’t you just admit that the 2.5 percentage point cut on VAT was reactive political headline grabbing, rather than getting to the heart of the financial crisis?” line.

Mr Darling was running late. As a consequence, there was some protracted mingling and I bumped into the former managing director of a long-standing supplier to Woolworths.

Chat centred on the tragedy of Woolworths’ collapse. Given when we had left our jobs, neither of us were in a position to know what happened, but there was one element that we were certain had played a major part in its demise – credit insurance withdrawal.

He was spitting cobs that, having taken insurance across the business for decades, just when he needed it cover was pulled. I was aware that some suppliers to EUK, Woolworths’ distribution subsidiary, had demanded payment upfront because of their inability to get insurance – something that I would estimate hit Woolworths’ cash position by tens of millions.

We resolved that when Mr Darling worked the room we would do our bit for the country’s fiscal policy – give him both barrels and explain the impact that the state of the credit insurance market was having on UK retail.

We identified an ace card: we would point out that big insurer Coface is part-owned by the French government. We would also tell him that until about five years ago the UK Government had a stake in the insurer that today trades as Atradius.

Then we would hit him with our big idea: stop pouring billions into the banking black hole. Stop fiddling with taxes where the effect is at best unpredictable and at worst impotent.

We would tell him to do something simple, immediate and cheap. He should set up a government-backed credit insurance facility. This could have prevented many insolvencies so far and would stop countless more. Facilitating credit insurance instantly buys trust and would work – and work quickly.

We thought we had some powerful, sensible messages. Then it was announced that the Chancellor wouldn’t make the reception as he had to attend a vote.

Time moved on, but need for a working credit insurance market did not. I checked the idea with friends and former colleagues across retailing and supply. The unanimous answer was: “Yes. That would definitely help a lot.”

So, for the first time I found myself writing to a politician. Before I knew it I had something akin to an angry shareholder letter. This, I decided, was guaranteed to receive a polite reply but not be listened to.

That’s why I have, instead, told this story to Retail Week readers. Once printed, I shall cut it out and attach it to a measured letter to Mr Darling. Politicians respond to media coverage.

If you agree, why not also send a copy of this article to the Chancellor with a letter of support. Before you know it, we might have a campaign.