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

The hon. Gentleman is absolutely right—no, I do not believe that. I am trying to set out a balanced argument to acknowledge the TUC's point of view. One of the important points of difference is that a public company has shareholders who are entitled to know all the information that I mentioned in order to make a decision on whether it is the sort of company that they want to invest in. There is no such requirement on privately owned companies. The TUC points out that that has social and economic impacts on society, and implies that private equity companies and all private companies above a certain size—although I have not been able to work out exactly what size it is referring to—should produce such information in order to create a level playing field. In the case of large companies with customers, those customers will be interested to know about the business practices of any company that they are going to buy from. However, a good company should publish that information anyway, without a statutory requirement. Another reason why the TUC does not like private equity companies is that they are often highly leveraged, which means that there is a high ratio of debt to equity and therefore a riskier future for their employees. It has a point, certainly in the current economic climate, although such companies are prepared to take on what are often much riskier propositions themselves. The TUC also points out that the debt of private equity companies is tax-deductible, so that high performance indicators for private equity companies would be only mediocre if that factor was stripped out of their results. We heard a lot from the hon. Member for Shipley about the wealth-creating abilities of private equity companies, but the TUC is not happy about the fact that those tax factors apply. Another thing that sticks in the unions' throat is the fact that private equity company partners are taxed on the basis of capital gains tax, not income tax, so they can pay only 10 per cent. tax instead of the higher rate of 40 per cent. that they arguably should be paying. That is a fair point. Even if the points that the unions have made do not impinge on this particular Bill, it may be interesting to give a bit of background. Another macro-economic implication that the unions do not like is that purchasing of publicly quoted companies reduces the size of the stock market, and if the size of the stock market is reduced, the liquidity of capital is reduced, which is seen as vital in ensuring the efficiency of capital investments. In summary, it seems that the unions see private equity as an unwelcome and uncontrolled intruder that gums up the economic works, and threatens jobs and not least the influence and power of the TUC itself. Will the Bill sort out the problems that I have described? Besides treating large private equity companies—again, I am not sure what ““large”” means—like publicly quoted companies, it adds further restrictions to the activities of publicly quoted companies as well. That is the information I have from the CBI, and I take on board the points made by the hon. Member for Nottingham, East about having a level playing field. However, the CBI is convinced that there are issues in the TUPE requirements that will have a detrimental effect if they spill over into the affairs of public companies. If the Bill goes to Committee—I regret to say that it probably will not—it will be important for us to consider those matters carefully. Members of all parties would not want the Bill to reduce the competitiveness of any sector of the market, although I fear that it might. It is worth repeating that much of what the Bill proposes are protections that employees of privately owned companies already have. They already have a statutory right for unions or other representative bodies to be consulted if 20 or more redundancies are planned, and a right to be informed or consulted about any significant change in the business. If there is no existing works council or employee representative in place, from 1 April, as the hon. Member for Shipley mentioned, a work force of 50 employees or more can initiate procedures to introduce one. They already have the right to ensure that any existing recognition or collective arrangements remain in play; they retain the same terms and conditions, and rights, as they had prior to the sale. The TUPE regulations were brought in to protect the rights of employees in non-share sales, to give those employees the same rights as those in publicly owned companies. I am not trying to be tautologous, but if the aim of TUPE was to give employees the same rights that those in private companies had already, what on earth are we doing debating whether existing TUPE requirements should apply to private equity takeover companies? The TUPE regulations were revised in 2006 only after lengthy consultations, and I question how relevant it is to bring the matter up again so soon after a lot of time, attention and consultation went into producing the last lot of regulations.