Socialist Worker

Private equity industry accused of raiding pensions at GMB conference

Issue No. 2054

The GMB union has accused the private equity industry of raiding workers’ pensions and dumping liabilities into insolvent pension funds.

GMB National officer Paul Maloney told the conference that a combination of tax breaks and job losses brought rich pickings for private equity firms. Thousands had lost their jobs following recent takeovers by private equity organisations of firms including the AA, Birds Eye and Burton Foods.

The GMB has called on Gordon Brown to introduce a windfall tax on private equity to repay taxpayers the hundreds of millions of pounds lost through the collapse of occupational pension schemes after firms taken over by venture capitalists have gone bust.

The demand came with the publication on Monday of this week of a report by the union linking private equity companies to the collapse of 96 pension funds.

The report highlights the role of one of Brown’s closest supporters, Labour donor Sir Ronald Cohen, who founded venture capitalists Apax Partners, to three of the collapsed pension schemes with deficits totalling £81 million.

These include Apax’s involvement with the British United Shoe company, the Dexion group and USM Texon.

Cohen, who has given £1.55 million to Labour, has chaired a number of government inquiries for Brown.

The report says 58 of the insolvent pension funds are in the government’s financial assistance scheme (FAS) and 38 are under consideration for help under the pensions protection fund.

The union has been able to identify details of only 21 of the 96 insolvent funds which have liabilities of just under £2 billion. The biggest are engineering firm Turner & Newell, covering 40,000 employees with a deficit of £875 million and MG Rover with £495 million.

The report goes into the detail of a number of the pension fund collapses. In one case, LDV Vans in Birmingham, researchers point out went into administration for just 24 hours, enabling it to shed some £234 million of liabilities – including a pension deficit of £28 million for 1,200 workers.

The GMB says, “Due to the secrecy with which private equity operates, GMB has not been able to establish any figures for the amounts of the unfunded liabilities of each of the other 75 insolvent pension funds.”

Paul Kenny, GMB general secretary, said, “Gordon Brown 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 amounts they have had to pay to bail out the unfunded liabilities of insolvent pension funds.”

Kenny said private equity was treating the public with contempt. “It is time that we all stopped being so gullible and face the facts. Asset strippers, as private investors hiding under a cloak of secrecy, and pretending to be interested in building up the UK economy, are taking the taxpayer for a ride, while destroying jobs and leaving in their wake thousands of workers who saved for their pensions without a pension to depend on the state.”

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Tue 5 Jun 2007, 19:11 BST
Issue No. 2054
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