Treasury sets terms of its own probe

The UK Treasury Select Committee has outlined the terms of its own enquiry into the private equity industry, following a similar move by Sir David Walker’s working party.

The UK Treasury Select Committee has outlined the terms of reference for its own enquiry into private equity, which it announced earlier this month in the wake of external criticism of the industry.

The committee, which is made up of MPs from all three major parties, will conduct the enquiry as part of a broader study called “Transparency in Financial Markets and the Structure of UK Plc”.

The enquiry will consider three main areas: the regulatory environment, which will incorporate the debates on transparency and excessive leverage; taxation, which will consider whether the current regime gives the industry an unfair advantage; and the economic context, which will look at the longer-term implications of private equity ownership and its link to the economic cycle.

Interested parties have until Wednesday 9 May to make written submissions to the committee.

The Treasury has already moved to help diffuse the current row over the industry, according to a report in the Financial Times. The paper reports that Shriti Vadera, one of Chancellor Gordon Brown’s closest Treasury aides, met some of the most influential figures in the UK buyout industry earlier this month when the row was at its height.

The FT says the Treasury met leading deal-makers from Apax, 3i, Blackstone, BC Partners and Permira to discuss how the industry would respond to union criticisms about a lack of transparency and improve its image. The Treasury was concerned that the vocal opposition of trade unions and other critics might create political pressure on the government to act against the industry, despite it having no wish to do so.