London's private equity firms bite back at Miliband: "He is anti-entrepreneurial"

What did London’s businesses make of the Labour leader’s Conference speech?

Ed Miliband made his keynote speech at the Labour Party Conference on Monday afternoon, and he didn’t shy away from mapping out a controversial vision of British businesses.

The Labour leader laid into private equity firms, accusing them of “asset stripping”.

So what does London’s business elite make of the Labour’s proposals for enterprise?

The overview

Miliband also attacked former RBS CEO Sir Fred Goodwin, saying he shouldn’t have received as much as he did for his final salary and shouldn’t have been knighted.

Miliband said: “Compare him to Sir John Rose, former chief executive of Rolls Royce, a great British business leader. Creating wealth and keeping jobs in this country. He is the true face of British business.”

Miliband went on to explain how he would reward sustainable wealth-creating businesses which create jobs and collaborate with universities to develop intellectual property while penalising those which make financial gambles.

BBC business editor Robert Peston interpreted Miliband’s proposals thus: “In concrete terms, what [Miliband] means is ‘Rolls-Royce good, Southern Cross bad’.”

Peston warned it is “hard to create general rules that define all the good businesses and all the bad businesses in a fair and accurate way”.

Commenting on Miliband’s speech, John Cridland, CBI director-general, said:

“With growth weak, Ed Miliband is looking for a new business model, but he must be careful not to characterise some businesses as asset strippers. We need businesses to create the wealth and jobs upon which our country’s economic recovery will depend.

“Equally, businesses must be responsible. The companies I meet are working tirelessly to create wealth and jobs in extremely tough times.

“Ed Miliband is right to encourage long-termism in business. Responsible businesses are those committed to investing in their workforce and innovative products and services.”

Miliband vs private equity

Speaking about the so-called “asset-strippers”, Miliband said that the 21st century choice is for people to decide whether they are on the side of “wealth creators” or “asset strippers”

Miliband: “Look at what a private equity firm did to the Southern Cross care homes.

“Stripping assets for a quick buck and treating tens of thousands of elderly people like commodities to be bought and sold.”

Jon Moulton, chairman of private equity firm Better Capital LLP: “Taking a potshot to divert attention away from Labour embarrassment”

“He is taking a potshot at private equity firms in order to divert attention from the embarrassment that the Labour party has caused itself by mis-handling the economy. With the government immersed in debt upto its armpits, it is the so-called big financial bets made by the private equity firms that are constantly generating revenue for the UK.

“It’s ridiculous to call them asset-strippers because we are wealth creators constantly pumping money into the economy.”

Peter Gordon, a former partner at private equity group 3i and co-founder of In-Deed Online: “I think Ed Miliband is anti-entrepreneurial”

“Private equity firms are no predators that have left the economy high and dry. I think Ed Miliband is just anti-entrepreneurial. Why doesn’t he just suggest that the government should reward those who perform well and punish those who don’t? He just talks about taxing successful businesses that bring money to the country which I think is really unfair.”

Spokesperson, British Private Equity and Venture Capital Association: “Private equity is about asset-saving not asset-stripping.”

“Private equity is about asset-saving not asset-stripping. Since 2009 UK private equity firms have rescued almost 50 companies from administration, safeguarding over 9,000 jobs. 

“Private equity is an industry which places long-term investment over short-term gain, building better, sustainable businesses and delivering genuine growth. As the UK economy continues to stutter, the last thing this country needs is to make it more difficult for British companies to access the funding they so sorely need.”

Miliband on apprenticeships

This is where Miliband might have struck a chord with businesses as he said “all major government contracts will go to firms who commit to training the next generation with decent apprenticeships.”

Jeremy Hempstead, chief executive, London apprenticeship company: “May help stimulate opportunities”

“The London Apprenticeship Company welcomes any proposal that encourages employers to create Apprenticeships. There are lots of talented and motivated young people that want to play their part in helping businesses grow but before they can embark on a Apprenticeship training programme they need an employer to offer them a job. Tax incentives and / or contractual obligations may help stimulate these opportunities”.

Gwen Parry-Jones, campus project director for EDF Energy: “Apprenticeships are a great way for young people to learn new skills”

“The energy industry offers long-term opportunities and apprenticeships are a great way for young people to learn new skills which will serve them well for the whole of their career.  The apprentices coming through the facility at HMS Sultan are of an extremely high quality and are a real asset to their power stations and the wider company. EDF Energy works hard to encourage young people to fulfil their potential and to consider an exciting career in Science or Engineering, and we do this, in part, through our strong links with our local schools.”

 

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