Private equity trade body in '£140bn' charm offensive

Private equity-backed companies have contributed £140bn in tax to the UK economy over the past five years, according to a new study commissioned by the industry trade body as part of its charm offensive to bring greater transparency to the market.

The report, commissioned by the British Private Equity and Venture Capital Association, showed that tax contributions totalled £35bn last year. The trade body added: "That's enough to pay for every nurse and police officer in the country."

Michael Snyder, chairman of the policy and resources committee for the City of London, said: "These days, private equity is a significant driver of the UK economy. In the past year, it has been in the political and media spotlight because the sector has grown hugely. The industry is working hard to be more transparent and should be seen as a force for good."

The traditionally secretive private equity companies have been hit by a public and political backlash over the past few years, which increased after household names including the AA and Alliance Boots, were taken private. The unions have slammed the companies as "asset strippers", and expressed concerns over the vast returns and a lack of accountability over job cuts.

Wol Kolade, chairman of the BVCA, said, as the debate over private equity has grown, "too many of the criticisms we have faced are based on fiction". He said this report, the ninth of its kind, is part of the BVCA's attempt to provide transparency in the sector.

Executives from some of the biggest buyout companies were hauled in front of a Treasury Select Committee in July to explain the business and why most only pay 10 per cent tax on multimillion-pound gains.

As a result, the BVCA asked Sir David Walker, the former chairman of Morgan Stanley, to draw up guidelines to provide greater transparency. This led to the creation of a committee to oversee a voluntary code of conduct for the industry, a move seen by some as designed to head off potential government interference. The BVCA announced the appointments to the group on Tuesday.

The private equity representation comes in the form of buyout heavyweights David Blitzer, senior managing director of Blackstone Group, and Robert Easton, managing director at The Carlyle Group. The independent members comprise Jeannie Drake, the retiring deputy general secretary of the Communication Workers Union, and Alan Thomson, group finance director of Smiths Group. The committee will be chaired by Sir Mike Rake, chairman of BT Group. This was designed so independents outnumbered industry members.

Last week, the BVCA also set up a global buyout committee to represent some of the largest private equity companies.

The UK private equity industry has invested more than £70bn in about 25,000 domestic businesses since 1984. The UK is second only to the US in the size of its private equity market and made up 57 per cent of the total European sector investment in 2006.

The BVCA report, released yesterday, estimated private equity-backed companies generated sales of £310bn last year, and exports of £60bn. The research also found in the five years to 2007, the number of people employed worldwide by UK private equity-backed groups grew by an average of 8 per cent per year, compared with 0.4 per cent at FTSE 100 companies. It estimated that companies that have received private equity funding account for around 3 million employees in the UK, about 21 per cent of private sector employees in the country.

With the onset of the credit crunch, the private equity industry has slowed markedly. Speaking at the launch of the report, Mr Easton said: "There is a lot of doom and gloom out there over bigger buyouts. We will struggle to get the multibillion-euro deals done until at least the end of the year."

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific