As business leaders wage a public opinion war with Labour party leaders ahead of the UK’s general election, private equity has taken a back seat to the spectacle.
“We don’t feel private equity is up for grabs, but there are policies that impact our portfolio companies in particular we’ll be tracking,” said Simon Horner, director of policy and public affairs at the British Private Equity & Venture Capital Association (BVCA).
Last week, more than 100 corporate leaders signed a letter to major UK newspaper the Daily Telegraph, which praised the Conservative-led government’s economic policies for making Britain “open for business.” They warned that “a change in course” on May 7 would “threaten jobs and deter investment.”
Of the 103 signatories, only two came from the private funds community: GCH Capital chairman Cassie Hutchings and Risk Capital chairman Luke Johnson.
A number of UK private equity professionals contacted by pfm to gauge their thoughts and concerns ahead of the election declined comment, many citing the industry’s apolitical attitude towards such matters.
The UK’s two main political parties remain in a statistical dead heat, with the latest polls putting both Labour and the Tories at or around 33 percent.
Despite its limited involvement, the industry has been tracking specific campaign pledges. Two weeks ago the BVCA launched its “Investment Agenda” that included a breakdown of the three leading parties’ political platforms, and a corresponding “BVCA policy recommendation.” Last week the agenda was updated to reflect new Labour policies that include, among other proposals, a pledge to reverse the government’s planned corporate tax cut this year.
“Whilst Labour have said that this reverse could pay for a tax cut for smaller companies, this would only be a short-term benefit,” the BVCA said in its policy response. “Ultimately small businesses, particularly those backed by private equity and venture capital, want to grow and become larger ones.” The Tories are expected to publish their election manifesto on April 13.
More recently, Labour party leader Ed Miliband said he would “abolish” non-dom rules that allow private equity executives and other wealthy UK residents to limit the tax paid on earnings outside the country. At press time, the BVCA’s investment agenda had not yet responded to Milliband’s comments, which were made during a Wednesday speech.