TUC Takes Call For Action On Private Equity To G8

by Robin Pilgrim, LawAndTax-News.com, London

30 May 2007

In a letter to UK Prime Minister Tony Blair published last week, the Trades Union Congress has renewed calls for increased regulation of the private equity and hedge fund sectors.

Earlier this month, in a submission to the Treasury Select Committee, the TUC argued that ministers should investigate whether tax relief should end on loans used for company takeovers; and should ensure that private equity partners pay proper income tax on their earnings.

The TUC also called on the government to close the tax loophole that exempts private equity firms from rules that require employees to declare shares received as part of their pay package as income.

In last week's letter to the Prime Minister, the TUC called on Mr Blair to bring the issue before the forthcoming G8 summit, suggesting that the G8 leaders should support German Chancellor, Angela Merkel's call for an effective regulatory framework for private equity and hedge funds.

Commenting on other concerns that it hopes to see raised at the meeting, the TUC argued that the G8 summit should support international labour standards such as freedom from child and forced labour, freedom from discrimination in the workplace, and freedom to join a union and bargain collectively set out by the International Labour Organisation conventions.

The full text of the letter, signed by Frances O'Grady, the TUC Deputy General Secretary, is as follows:

"Further to Brendan Barber's letter to you of 8 May and the trade union statement to this year's G8 summit, I wanted to raise a number of issues which came up when I took part in a G8 union leaders' meeting with Chancellor Merkel in Berlin earlier this month.

Environment

First, we feel it is essential that the UK Government continue to push hard for strong targets in regard to preventing climate change; and support calls for the G8 countries to develop a green jobs strategy that will harness the need for technological change to the full employment and Decent Work agenda. We understand that this will require some tough arguments with your G8 partners. When David Miliband came to the General Council in April he emphasised that the TUC should use our international contacts to promote this agenda, and we have secured the unanimous support of trade union movements across the G8 for action on climate change. With ITUC colleagues we have also been increasingly active in the Kyoto Treaty processes. I hope that is of some use to you in your discussions.

Private equity

Second, I also hope that that the UK Government will support Chancellor Merkel's call for the development of an effective regulatory framework for private equity and hedge funds. Serious questions are now being asked across the world about the impact of the rapid rise of private equity and hedge funds on tax revenues, on jobs and growth, and on the long-term sustainability of economies increasingly based on very high levels of corporate debt. Only more detailed investigation followed by the necessary regulation will ensure that new asset classes of this sort benefit the whole of the economy and not just a handful of financial specialists.

Development

Third, whilst we are all continuing to work for a successful outcome of the Doha trade round we also feel that commitments should be secured at the G8 for an ambitious aid-for-trade package even if the Doha round is further delayed. Such a package would have a major impact on improving the ability of developing countries to trade, regardless of progress on broader tariff reform, and that would improve their ability to grow.

In that context, the TUC of course welcomes your work in seeking to ensure that the commitments made on development and Africa at the Gleneagles summit are fully honoured in particular in regard to increased aid flows, greater funding for the provision of universal education, funding for HIV-AIDS prevention and treatment programmes and support for other work to combat preventable diseases such as Polio and TB.

Labour standards and decent work

Finally, we were very pleased with the chair's conclusions from the Dresden Employment Ministers meeting earlier this month, which make specific reference to G8 support for the Decent Work agenda and for the universal implementation of the ILO's core labour standards conventions covering freedom from child and forced labour, freedom from discrimination in the workplace and freedom to join a union and bargain collectively.

As you are aware the eight core conventions that establish the core labour standards are basic human rights which must underpin sustainable development and moves to achieve fairer globalisation in general. We understand your concerns about protectionism and the need to ensure that core labour standards are not used to foster protectionism (although we have never been presented with evidence of that happening), and realise that this concern might need to be reflected in the text. But I would be grateful for your commitment to ensuring these sentiments are reflected in the final communiqué from the G8 summit."

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