Supplementary memorandum submitted by
Many thanks for your letter of 14 June 2007.
You asked me to clarify my comment to the Financial Times concerning
tax on carried interest, and to comment on Peter Linthwaite's
comments on the BBC.
1. My specific comment to the Financial
Times journalist which referred to the tax rate on carried interest
was accurately quoted inside the FT on 4 June 2007. What was not
made clear was that:
a. They were my personal views, and did not
reflect the views of either SVG Capital plc, which I chair; its
fund management business, SVG Advisers; or of the Private Equity
investor Group, which I co-ordinate (see paragraph 4 below);
b. It was very important to have a careful
approach to this question, to ensure the continuation of the encouragement
to enterprise in the UK, which has been so successful over the
last 10 years; and to maintain the competitiveness of the UK's
financial services sector. Hence, my comment that it was important
not to throw the baby out with the bath water.
I am disappointed that my personal comment on
carried interest taxation has received disproportionate attention
and has distracted from the wider debate concerning the many merits
of private equity to the UK economy.
2.1 cannot comment on Peter Linthwaite's
remarks on the BBC as I did not hear them.
3. My comment to the Financial Times was
made in a long interview which covered much more than appeared
in the article. In particular I had pointed out:
The millions of people whose savings
benefit from the private equity industry. As one example, in the
last fund in which SVG Capital invested, the investors included
pension funds investing on behalf of 33 million people, as well
as 4O charities and endowments, and 20 Life Insurance companies,
with all of their numerous beneficiaries.
The great majority of the gains from
private equity investment have gone to these millions of savers,
through higher aggregate returns than provided by the stock market.
Private equity now forms an important part of the portfolios of
leading long-term savings institutions, including pension funds
These benefits have come primarily
and positively through increasing the sales, productivity and
earnings of the companies in which private equity funds have been
The unions views on private equity
seem to pay no attention to these benefits. The interests of so
many savers, so important in this time of concern about pensions
and long term savings, are not served well by this.
4. I co-ordinate the Private Equity Investors
Group (Hermes, 3i, The Wellcome Trust, Standard Life and SVG Capital).
Together we have £20 billion committed
to private equity investment, on behalf of our investors who include
UK pension fund beneficiaries, individual pension savings, insurance
company beneficiaries and many charities and endowments. The members
of this group have seen this letter and the comments in paragraph
3 are made on their behalf.