MICHAEL Fallon, the Tory deputy chairman, yesterday said the private equity industry was “out of control” while Labour was in power – even though he earns £14,000 a year as a director of a private-equity owned healthcare firm.
Responding to Labour leader Ed Miliband’s speech describing buyout firms as “asset strippers”, Fallon said: “Miliband and Ed Balls were in government when Labour let private equity and banks get out of control and created the biggest boom and the biggest bust in living memory.”
His comments were contained in a briefing note from the Conservatives, which attacked Labour for praising private equity firms while in government and for allowing them to benefit from various tax reliefs.
But Fallon earns an annual fee of almost £14,000 for his work as a director of Attendo, a Scandinavian healthcare company that is majority owned by private equity house IK Investment Partners, according to the Commons register of members’ interests.
The Tory party chairman is also a minority shareholder in Just Learning, the nursery firm that was bought by private equity group Alchemy Partners for £22m in 2001.
Fallon, who set the nursery chain up with Dragons’ Den entrepreneur Duncan Bannatyne, resigned as a director of Just Learning at the end of 2009 but still owns seven per cent of the company, according to Companies House.
In an article on his website, first published in House Magazine in October 2009, Fallon writes: “It wasn’t hedge funds, derivative trading or private equity houses that caused the financial crisis.”
Fallon did not return calls in time for publication.
BEHIND THE LINES | WE ANALYSE ED MILIBAND’S SPEECH
DURING Labour’s leadership contest, Ed Miliband triumphed largely through being perceived as more “real Labour” than “New Labour” -- in contrast to his brother David.
Yesterday he threw several bones to the trades unions that backed his rise to the top and signalled a departure from the Blair and Brown years. On top of his frequent banker-bashing, Miliband said New Labour had not done “enough to change the values of our economy”.
“We shouldn’t have given Sir Fred Goodwin that knighthood,” he admitted. “We have seen immigration policy which didn’t work for the people whose jobs, living standards and communities were affected,” Miliband said, using the words “Britain” or “British” close to fifty times during the speech.
Miliband also blasted “the old set of rules” for business. And after promising tighter fiscal rules, Miliband stated: “We can’t spend our way to a new economy” -- potentially a swipe at Labour’s profligate public spending in the previous decade, although strange for a man who simultaneously criticised the coalition’s austerity plans.
By Julian Harris
“The Labour Party lost trust on the economy. And under my leadership, we will regain that trust. I am determined to prove to you that the next Labour government will only spend what it can afford. That we will live within our means. That we will manage your money properly.”
A bold pledge, and one that could come back to haunt Miliband if he manages to overcome weak poll ratings and eventually become PM. Despite endorsing frugality, he still managed to attack the coalition’s deficit reduction plans: “Government is cutting back. And the recovery has stalled.”
“This summer’s riots - not the first time we’ve seen decent people with the right values losing out to those with the wrong ones. The banking crisis, MPs’ expenses. Journalists hacking phones. From them all a something for nothing culture. Take what you can. Fill your boots.”
Loading his speech with talk of Labour’s values, Miliband drew a parallel between bankers’ “telephone number salaries” and this summer’s looting. He said the banks “must change so that they are part of the solution to our economic future, not part of the problem.”
“Let me tell you what the 21st century choice is: Are you on the side of the wealth creators or the asset strippers? The producers or the predators? Producers train, invest, invent, sell. Things Britain does brilliantly. Predators are just interested in the fast buck.”
The crux of the speech: Miliband said he was pro-business, but distinguished between good and bad business, promising “ways that the rules of our economy can favour or discourage.” All very nice, but in a notably policy-light speech, it remained unclear how this utopia could come about.