Private Equity (Transfer of Undertakings and Protection of Employment) Bill

The hon. Gentleman is right that workers are often in the dark. I was working for Asda when it was taken over by Wal-Mart. Inevitably, because of market sensitivities, we were in the dark to a certain extent about what was happening, but we were pleased that we would retain our jobs and that the company would survive and flourish as a result of the takeover. Being kept in the dark is a minor issue compared with having one's company safeguarded. We ought to touch on the importance of the private equity and venture capital industry to the UK economy. It is estimated that in the last financial year, 2006-07, private equity-backed companies generated total sales of £310 billion, provided exports of £60 billion and contributed almost £35 billion in taxes to the British economy. That tax bill alone equates to the salaries of all nurses, ambulance staff and police officers throughout the United Kingdom. Private equity firms are therefore making a massive contribution to the UK economy, as well as to the public services that their taxes provide. Currently, more than 1,500 firms are engaged either directly or indirectly in private equity-related activity. The industry itself employs more than 18,000 people, more than 15,000 of whom are highly skilled professionals. According to a survey carried out last year by the Financial Times analysing the 30 biggest private equity deals conducted during 2003-04, 36,000 jobs had been created as a result of those investments. The Government are for ever stressing—rightly, as it happens—the importance of improved productivity to the United Kingdom's economy, and the fact that we cannot succeed without it. A study by Michael Wright of Nottingham university is particularly insightful. He surveyed the industry output of 30,000 UK factories, and found that factories that underwent a buy-out enjoyed big productivity increases, rising from an average of 2 per cent. below the average before the buy-out to an average of 90 per cent. above the average following a private equity exit deal. Private equity is leading the way in improving the productivity of British business. Moreover, it provides substantial returns for its investors. Labour Members may well conjure up images of fat-cat investors, but we should not forget that many pension funds are investors in private equity firms, and many people's pensions depend on their success. They provide fantastic returns for their investors. More than 1,300 UK companies received a total investment of more than £10 billion last year alone.