Telegraph: Non-dom fury fires up City

14 February 2008

Leading City figures stepped up their attack on the Government's planned changes to the taxation of non-domiciles yesterday, warning a gathering of financiers that the "mood music" in London had been irreparably damaged.

 

Speaking at the launch of a report into the economic impact of the private equity industry, Simon Walker, chief executive of the British Venture Capital Association (BVCA), added: "When London had built up a reputation for being friendly, every move in the other direction has a big impact. It is chipping away at what has made London such an attractive place for highly mobile firms to base their activities".

 

Robert Easton, managing director of private equity firm Carlyle, said: "People will up sticks and move."

 

The City's exasperation at what it sees as the Government's bungled reforms overshadowed the BVCA's defence of private equity, which concluded that the industry was a "significant driver of the UK economy and its global competitiveness".

 

The study concluded that private equity backed businesses created jobs at a faster rate than other private sector companies, grew their sales faster than comparable businesses, boosted the UK's exports and contributed nearly £35bn in taxes.

 

The BVCA, which received responses from 1,013 out of 6,100 companies, estimated that around 3m people are employed by companies that have received private equity funding.

 

Cass Business School's Professor Mario Levis, who is conducting a separate study on private-equity backed companies for the BVCA, said the benefit of private equity ownership continued after companies had been sold on or floated on public markets.

 

However, Mr Easton warned that the credit crunch would constrain the industry for the foreseeable future. "We will struggle to get big buyouts done in the next year and even into next year," he said.

 

By Tom Stevenson

© The Daily Telegraph