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It's Just A Jump To The Left...
There's a devastating attack on private equity firms in the British media today. Describing private equity as "locusts" - the notorious language of far-left European demagogues - it criticises Chancellor Gordon Brown's low-tax regime for allowing British workers and their pensions to be at the mercy of "people in sharply-cut suits behind closed doors".
The tax relief granted to private equity - up to £4.5 billion last year - should be snatched back and redistributed, it concludes.
Where did this wide-ranging attack appear? The Guardian? The New Statesman? The BBC?
None of the above. It's in the right-wing, Thatcherite Daily Mail.
Titled "The new robber barons: City fat cats are cheating hard working families" the column argues that "multi-millionaire buccaneers", attracted by a tax rate often lower then ten percent, are buying into "our greatest companies" and selling them several years later "in much worse state" than they were when they were bought up.
Many of the firms are faceless American funds. Many of their staff live and work in London, however, and could move on if Brown tightens the tax regime on their companies. The author has little time for the argument that if PE firms quit Britain, they could take a sizeable amount of British prosperity with them, resettling in any number of other states who would offer similar breaks: "The vast majority of these private equity barons are not here simply because of the beneficial taxation regime.
"London is a supermarket of financial expertise - the global headquarters of many investment banks - and has infrastructure and skills that cannot be replicated in Dublin and tax havens such as the Cayman Islands or Monaco."
Abolishing tax breaks for private equity could slice three percent on the rate of income tax for everyone, or even abolish inheritance tax altogether, the author claims.
On the surface, it is deeply surprising to see this piece in the Mail, even though the paper's editor Paul Dacre is reported to admire the Chancellor and next PM, Gordon Brown. Brown is coming under pressure from his party's left to end the break. He has hinted himself this week he may do so; indeed, many PE firm bosses believe their days of low tax in London are numbered.
But the Mail has always followed the Thatcherite line that what is good for the rich is good for the rest of us: The rich spend on services which keep us in jobs. Do super-rich fund managers not fall into this category?
And does concern at the widening gap between rich and poor, and the taxes we pay relative to our income really merit a foray into the incendiary language of the extreme left in Germany?
Much of London's wealth - and its entire property boom, at least in its chic neighbourhoods - has depended on overseas financiers setting up shop in the City. Spiralling prices for houses and services, especially those in those areas London's middle class used to call their own have led to complaints from Londoners that they can no longer afford the luxuries their parents or grandparents were entitled too.
Magazines and newspapers are filled with complaining columns by journalists "too poor to be posh." Nannies, decent schools, a flat in West London all seem out of reach for middle class Londoners, who eye incoming Russian oligarchs, oil Arabs and private equity Americans with similar distaste.
Is this story merely an extension of middle class resentment, or are we seeing one of Britain's most traditional conservative newspapers making a lurch to the left?
