UK Parliament / Open data

Small Business, Enterprise and Employment Bill

I, too, shall speak to Amendments 48 and 49, as they are grouped together, and express the same reservations as my noble friend Lord Flight about not wishing to have the two connected. The reason for my amendment is principally to ensure that the policy objectives of the Bill are met. I seek to manage and mitigate unintended consequences as much as possible, in this case by making sure that only individuals who meet the criteria set out are disclosed and not many others by dint of legislative accident.

It is worth noting here that the Bill has already been improved in this regard. The original draft would have missed out partnerships entirely, because they have no legal personality, and forced the disclosure of hundreds of investors, none of whom owned 25% of the business, but all of whom would have been deemed to have owned that amount through their investment vehicle.

A particular concern is private equity, as my noble friend Lord Flight said. Funds raise money from many investors of different types and different geographies, but normally none of their investments as individuals would be anywhere near 25% of the fund. The private equity fund, typically known as the general partner, takes responsibility for investing that fund in a portfolio of businesses and managing those businesses. It is the fund run by the general partner and not any individual investor who exercises significant control. It is right that the public and, indeed, Governments know who that is. It is not necessary for them to know who the individual investors are behind it.

The merits of this point were accepted in the other place and there is an exemption for English limited partnerships. This amendment seeks to apply that to other limited partnerships that are similar to English limited partnerships in structure but are governed by other laws. I am thinking in particular of partnerships structured in the Crown dependencies. It is very important that we offer a level playing field in this context. Funds structured particularly in the Channel Islands and elsewhere are direct drivers of inward investment into the UK. To be clear, we are not talking about tax avoidance or tax evasion. It is simply a mechanism for investment. It is typically used by pension funds, which

would not pay tax in any circumstances. My amendment would allow any partnership deemed similar in structure to an English limited partnership to be treated the same as one and not have to disclosure hundreds of investors underneath it.

In his excellent Budget in 2013, the Chancellor commendably launched a new initiative to make our asset management industry as competitive as possible. It was about encouraging our financial services industry to be drivers and attractors of inward investment in the real economy. These partnerships are great channels for such investment and must be encouraged. That is why they should be treated the same as English limited partnerships. If the amendment in my name and that of my noble friend Lord Flight is accepted, investors in partnerships, which are of huge benefit to the UK economy, will be treated as if they had invested in an English limited partnership or one that is similar in spirit.

Type
Proceeding contribution
Reference
758 cc310-1GC 
Session
2014-15
Chamber / Committee
House of Lords Grand Committee
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