Private equity firms 'ruining UK industries'

Published on Monday 4 June 2007 12:01

PRIVATE equity firms have today come under increasing fire amid claims they are ruining British companies.

The GMB union is calling for Chancellor Gordon Brown to make the industry more heavily regulated following bitter clashes between the union and private equity companies.

It says the firms are "destroying" jobs and "treating the British public with contempt".

It comes as one of the leading figures in the UK private equity industry criticised tax rates that leave buy-out executives "paying less tax than a cleaning lady".

Nicholas Ferguson, the chairman of SVG Capital who built Schroder Ventures Europe from scratch before it became Permira, also hit out at banks who offer private equity firms "cov-lite" loans, which dispense with the covenants linked to operating performance that is usually attached with corporate debt.

GMB members are set to get the chance to quiz Mr Brown on the issues at its Brighton annual conference tomorrow.

The GMB claims the industry is "dumping" more than 2 billion of liabilities in insolvent pension firms.

GMB general secretary Paul Kenny said:

"Asset strippers, as private investors hiding under a cloak of secrecy and pretending to be interested in building up the UK economy, are taking the taxpayer for a ride while destroying jobs and leaving in their wake thousands of workers who saved for their pensions."