Govt under pressure to regulate private equity
Unions have called for greater transparency and regulation of private equity firms.
Delegates at the TUC conference in Brighton overwhelming backed a motion condemning the practices of private equity firms and calling for greater protection of employees.
Brought by Connect, it described private equity as a “21st century gold-rush,” where takeovers by private equity firms frequently lead to a loss of rights and benefits for employees.
Delegates rejected Gordon Brown’s appeal to private equity partners to use their “moral compass” and called for government-backed regulation to protect workers’ rights – as well as a fairer tax regime.
Jack Dromley, deputy general secretary of Unite, warned self-regulation would be “worse than useless”.
He told delegates: “Private equity makes the Costa Nostra look like a model of openness and transparency by comparison.
“All the evidence we have seen is that jobs, pay, terms and conditions and pensions are put at risk when these companies come in.”
Unite wants equity takeovers defined as mergers, meaning vital employment rights are triggered under employment transfer regulations.
Supporting the motion, Jeremy Dear, general secretary of the NUJ, said private equity partners had become “modern day robber barons”, squeezing employees to demand as much as a 40 per cent return on investments.
He backed calls for government action, including more regulation, transparency and protection for the rights of workers.
Richard Lambert, director general of the CBI, earlier agreed private equity firms do need to disclose more about the way they work.
While rejecting calls for more corporation tax, he agreed there was a “legitimate question” surrounding the non-domicile and other tax regulations enjoyed by private equity partners.
He told conference delegates: “My view is, if it looks like a duck, tax it like a duck, if it looks like income, tax it like income.”
Campaigning by Unite and the GMB has already prompted a Treasury Select Committee inquiry, which is due to report next month.
