Should taxes paid by wealthy financiers be raised in Budget?

With that in mind, many will be aghast at talk that he might try to make the profits people realise on the sale of their main homes subject to capital gains tax, unless he sets the threshold at a very high level.

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Homes are the only significant assets owned by many people.

Other areas of the CGT regime would be much better candidates for reform if the Chancellor wants to play fair.

One obvious contender is the quirk of the system that led to complaints amid the last financial crisis that wealthy private equity executives were paying tax at lower rates than the people who cleaned their offices.

This is because the share they get of the profits made by their firms on investments, carried interest, is taxable at a lower rate as a capital gain than it would be as income.

Capital gains tax is payable at only 28 per cent on carried interest. That compares with a 46% higher rate for income tax in Scotland and 45% in the rest of the UK.

Income tax rates start at 19% in Scotland and 20% in the rest of the UK.

Advocates for change have long felt that the money people earn in respect of carried interest should be taxed as income. It is effectively just a kind of bonus. These are taxed as income.

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Lobbyists are concerned enough about the possibility of the Chancellor changing the tax regime that they have started issuing dire warnings about the potential consequences.

The British Private Equity and Venture Capital Association (BVCA) raised the prospect that change to the carried interest regime could result in the UK being starved of vital investment.

In a statement about the review of CGT issued last week, it said: “The current regimes for fund managers’ carried interest in the funds they advise and management teams’ equity participation in portfolio companies are very important for the private equity and venture capital industry.”

The association said the boundary between income and capital is conceptually drawn in the right place under the current regime, adding: “It is also important that any tax changes do not undermine the government’s clearly stated policy of developing the UK as an attractive location for the asset management industry.”

But such arguments have been given short shrift in the past.

In 2007 a senior figure in the private equity industry, Nicholas Ferguson, provoked a storm when he said some executives in the sector were paying less tax than the cleaners of their offices. The tax rate charged on some carried interests was just 10% at the time. Mr Ferguson said then that he did not agree with the argument that everyone would go abroad if the rules changed, noting that anyone who wanted to live in low-tax Guernsey could do so already.

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If private equity executives want to continue to get what looks like special treatment they must show that they deserve it.

The BVCA argues that private equity and venture capital firms play a vital role in supporting the growth of the UK economy by using money raised from pension funds and the like and their business acumen to grow and improve the companies they invest in.

“Private equity and venture capital delivers for both institutional investors and for the wider economy, providing investment, driving innovation and building British business. It is, quite simply, funding the future,” says the association.

Last month it told the Financial Times that private equity and venture capital support 843,000 jobs across the UK, in 4,300 different businesses. Private equity firms were drawing on their expertise and unused “dry powder funds” to help businesses respond to the coronavirus crisis and would continue to invest across the UK through the cycle.

But sceptics have long had doubts about how special private equity is and how much value the industry creates for society.

Some investment strategies seem to involve little more than buying firms then loading them up with cheap debt in pursuit of growth. The firms involved may then be vulnerable to a downturn.

A range of private equity-backed restaurant groups have faced big problems in recent years after a herd-like dash for expansion in the casual dining market.

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In July Byron Burgers said it would close 31 of its 51 outlets with the loss of 651 jobs following a rescue deal. The owner of the Café Rouge and Bella Italia chains, Casual Dining Group, went into administration the same month and closed 91 restaurants. It was acquired by a new private equity owner, Epiris, in August.

Private equity firms have been criticised for cost-cutting moves at portfolio firms that have resulted in job losses.

Asked how many private equity-owned firms have received funding from the UK Government under the coronavirus furlough programme and how much they have received in total the BVCA said it did not track that.

It is not clear how much private equity firms have contributed to the Scottish economy in recent years following big changes in the local industry.

The number of companies backed in Scotland fell after some private equity firms decided to focus on backing big buyouts rather than providing venture capital for earlier-stage firms.

Sector giant 3i invested in a range of small and medium sized enterprises in Scotland before deciding to concentrate on bumper deals. It once had offices in Glasgow, Edinburgh and Aberdeen.

Other names that have disappeared from the Scottish scene include the NatWest Equity Partners business that developed into Bridgepoint.

Some of the firms that remain have spent much of their time doing deals outside Scotland.

Technology specialist Scottish Equity Partners has stood out for providing early-stage funding for a range of companies in Scotland that have gone on to achieve great success.

These include the Edinburgh-based Skyscanner flight search business which was acquired by China’s Ctrip in a £1.4bn deal in 2016.

London-based private equity firms have done deals in sectors that have became hot in recent years, including oil services. Firms in the sectors are facing huge challenges amid the slump in commodity prices triggered by the coronavirus.

While the bank-funded BGF has supported established firms in Scotland, the job of investing in early-stage businesses with growth potential has been left increasingly to syndicates of private angel investors. These include Archangels.

However, successive Scottish governments have provided them with significant support through co-investment funds, through which the public sector shares the risks involved.

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With the coronavirus crisis likely to make investors wary of committing to deals there may be an opportunity for the new Scottish National Investment Bank to convince doubters that it has a role to play. The bank’s chairman, Willie Watt, achieved prominence while running 3i’s Scottish business in the 1990s.