The Prime Minister assured Labour supporters yesterday that he would clamp down on any tax loophole that benefited private equity bosses.

Responding to a question from a delegate, Gordon Brown told the party conference in Bournemouth: “Whenever there’s a loophole that shouldn’t exist, we take action.

“Sometimes it’s very difficult to do so because you’ve got lawyers and accountants who are always trying to find these loopholes. But on this issue of private equity, I can assure you we will do so.”

The Treasury is investigating tax issues relating to private equity, focusing on whether leaders in the sector should pay 10 per cent capital gains tax on their business investments or 40 per cent income tax.

The tax system enjoyed at present by the private equity industry was created by Mr Brown during his tenure as Chancellor, in an attempt to encourage entrepreneurship.

However, the tax breaks brought the ire of MPs and unions when Nicholas Ferguson, the chairman of CVG Capital, admitted in an interview that some of the industry’s senior figures paid less tax than their cleaners.

The British Private Equity and Venture Capital Association said yesterday that it would be “very concerned” if the Government damaged the competitiveness of Britain’s private equity firms.

Wol Kolade, the chairman of the association, said that it was time to explain to the public why the private equity industry was vital to the British economy. He said that the industry generated £26 billion in tax last year.

To qualify for the 10 per cent tax rate on provits made on investments, executives must hold the assets for at least two years. With the possibility of a snap election looming, Mr Brown’s comments were seen as an attempt to please union leaders. But sources at the Treasury say that there is no certainty that changes will be made to the present tax rules.

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