Gordon Brown will today come under intense left-wing pressure to introduce new laws to control the "damaging behaviour" of immensely rich private equity firms.
The incoming Prime Minister is due to attend the GMB union's annual conference in Brighton, which yesterday launched a withering attack on the sector, accusing it of bullying staff, sacking workers or paying them off to prevent them from going to employment tribunals. The leading union demanded the government end tax concessions enjoyed by private equity firms.
During a fringe meeting at the conference today, John McDonnell, the left-wing London MP who unsuccessfully tried to challenge the Chancellor for the Labour crown, is due to call on him to control what he insists is the "damaging behaviour" of private equity firms.
Last night, he said: "I am challenging the Chancellor to act without delay to introduce legislation to control these global private equity groups that treat British workers and some of our biggest companies as nothing more than pawns in a game of get-rich-quick where the greedy always win."
Earlier, Paul Maloney, the union's national officer, said thousands of workers had lost their jobs after recent takeovers by private equity organisations of firms including the AA, Birds Eye and Burton Foods. "Their jobs have gone, their rights to future pensions have gone and their dignity has gone," he declared.
Mr Maloney said the human impact of the recent sale of the AA was the single biggest exercise in "corporate bullying" ever seen in the UK. He claimed staff had been sacked and escorted off the premises while part-time staff were hired in their place and said employees had been given a few thousand pounds and made to sign an agreement not to go to an employment tribunal. Branding private equity companies asset strippers, he added: "They are not Robin Hood, they are robbing bastards."
The union seized on remarks yesterday from Nicholas Ferguson, chairman of SVG Capital and one of the private equity industry's leading figures, that tax relief allowed private equity firm employees to pay "less tax than a cleaning lady".
Paul Kenny, the GMB's general secretary, said: "It's official: even top private equity chiefs are freely admitting the current tax regime allows them to pay less tax than the minimum wage worker and he even agrees there is no justification for this.
"This is an important and significant breaking of the ranks and the GMB applauds Nicholas Ferguson for being honest about the significant tax privileges enjoyed by the private equity industry."
The union's attack on private equity firms followed its claim they were "dumping" more than £2bn of liabilities into insolvent pension funds.
Demanding a Commons inquiry into the issue, Mr Kenny said: "The Chancellor must close the loopholes to stop private equity mugging the British taxpayer.
"He should also bring in a windfall tax on private equity to repay the taxpayer the amount they have had to pay to bail out the unfunded liabilities of insolvent pension funds."
The GMB earlier delivered a boost to Peter Hain's chances of becoming Labour's deputy leader when it backed the bid by the Northern Ireland and Wales Secretary. It followed a hustings at the conference when all six candidates answered a series of questions from delegates on a range of issues.
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