Tories u-turn over private equity

More clueless policy on the hoof from the Tories, this time in relation to private equity. They are not alone in being surprised by how the rise private equity has blown up to be be a major political an economic issue. As always however, the Tories initial instincts are anti-union and mindlessly pro-status quo. As I mentioned at the time, George Osborne foolishly gave a very slavish speech to the BVCA back in March where he gave the clear message that the industry needed to be a bit more transparent but basically everything else was hunk dory. He specifically referred to the tax treatment the industry receives, arguing that promoting more venture capital (as opposed to buyout activity) would make it more acceptable:

"The third response to the attacks you face is to do more to promote proper venture capital. Remember, the tax treatment that you work under was introduced to boost real venture capital. So the best response you can make to criticism of that tax treatment is to ask again: why does Britain have such poor venture capital funding, compared to the United States?"

"That has got to change. Don't just be a private equity industry - be a venture capital industry too. More transparency. Real social responsibility. Proper venture capital."

"Meet your side of the bargain and I will meet mine."

Now The Observer confirms reports from last week that Osborne is planning to review the tax treatment that applies to private equity.