Private Equity Takeovers

Lord Sikka Excerpts

Thursday 21st October 2021 Lords Chamber

Asked by

[Lord Sikka]

To ask Her Majesty’s Government what assessment they have made of the takeover of United Kingdom companies by private equity firms; and in particular, their effect on the economy.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the UK’s merger regime recognises that investors play a major and positive role in the UK economy and that many UK sectors have benefited substantially from takeovers and mergers. On the few occasions that private equity-funded acquisitions have raised concerns, the Government have always carefully monitored developments and taken action when there were clear public interest grounds.

[Lord Sikka (Lab)]

My Lords, the typical business model of private equity includes high leverage, financial engineering, tax abuse, pension dumping, job losses and asset stripping. This trail of destruction includes Silentnight, Bernard Matthews, Debenhams, Maplin, Cath Kidston, Toys “R” Us, Four Seasons and much more. When will the Government commission an independent inquiry into the impact of private equity’s destructive practices on all stakeholders?

[Lord Callanan (Con)]

The UK’s merger regime, which I remind the noble Lord was put in place by the last Labour Government, recognises that overseas investors play a major and positive role in the UK economy, and that many UK sectors have benefited substantially from takeovers and mergers. Such transactions can help to boost UK jobs, increase management efficiency and support businesses to grow on the world stage. We benefit from being an open and accessible economy.