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

With the greatest respect to the hon. Gentleman, if he allows me to continue my speech he will hear me deal with the laws that already exist. However, I think it right to begin by explaining the importance of the industry to the UK's economy. One of the myths about private equity is that it is a short-term investor, entering a business as a carpetbagger and exiting at the first possible opportunity after making a big profit. A study published earlier this year by the World Economic Forum found that private equity firms tend to hold on to their companies for longer than investors in public companies. In fact, nearly 60 per cent. of private equity fund investors have exited more than five years after their initial investment. It seems that in these increasingly uncertain economic times, private equity has a crucial role in helping to provide stability in the economy, because it takes a long-term investment view. The hon. Member for Nottingham, East said that workers faced uncertainty while people were buying into or taking over firms. On the whole, however, private equity firms invest for longer in companies and therefore create less uncertainty for workers than is normally created. In order for our economy to remain competitive, businesses need a stable economic and regulatory environment, but the Bill would serve only to add to uncertainty in the private equity industry about what future regulations might apply to it. I fear that, if such an arrangement applies, some private equity businesses might decide to invest abroad. We are competing in an increasingly global economy, so we cannot rely on people just to keep on investing in British companies alone.