THE GMB has called on the government to delay the private equity take-over of Boots in the wake of the IMF warning of the prospect of a private equity collapse.
The GMB warns that the company will be loaded with debt and be forced to close hundreds of Boots stores serving local communities to pay interest on these massive debts.
Paul Maloney, GMB National Secretary has commented on the publication of the IMF ‘Global Financial Stability Report’ saying that a large scale collapse in the private equity industry is increasingly possible.
He said: ‘In the wake of the IMF report on the dangers of a private equity collapse the GMB is calling on Secretary of State for Health, Patricia Hewitt, and the Secretary of State for Trade and Industry, Alistair Darling, to use their powers to delay the £10.1 billion projected takeover of Boots by the private equity industry.
Patricia Hewitt has powers to do this as one of Boots largest customers and Alistair Darling has powers to do this under various Industry Acts.
Patricia Hewitt needs to ask Boots, a major supplier of medicines to the NHS, how the sums add up for the taxpayers, one of Boots largest customers.
She also needs to ask how many hundreds of their local pharmacies, which have served local communities for many decades, will be forced to close to pay the interest bills.
The Government cannot ignore yesterday’s IMF warning.
Alistair Darling, alongside Ministers from the Treasury, must ask the private equity companies bidding for Boots, how they plan to pay the interest payments which will amount to over half a billion pounds per year out of Boots profits of less than that amount.
They need to query the extent to which the debt is affordable only because the interest on the debt is tax deductible.
The GMB estimate that the taxpayers will be funding the purchase of Boots by the private equity industry with the loss of £144 million corporation tax from the Exchequer.
Ministers need to ask what will happen to prices and to the number of stores if interest rates rise or if there is some other downturn in the market.
The GMB has repeatedly asked the Government to abolish the tax breaks that the Union considers is the motor that is driving this takeover of Boots and other household names.
The GMB is not alone in pressing for this. City commentators have said that the ‘super returns that private equity boasts of is merely a form of tax arbitrage.
‘Since the Government is responsible for the tax system it is high time it investigated Wall Street’s drive to the High Street and what lies behind it. A change to the rules can be made without impacting on deductibility for borrowing for non leverage purposes.
‘The Government cannot stand aside while jobs and services to local communities’ are put at risk for the benefit of the multi-millionaire elite as the IMF warns that a private equity collapse is on the cards.
‘There is a number of motions on this subject at the GMB Congress in Brighton in June and GMB members will want this issue debated in the forthcoming Labour Party leadership election.’
Meanwhile the news that CVC have backed down in their bid to take over the Sainsbury’s supermarket chain was welcomed by the Transport and General Workers Union which represents 25,000 of the company’s employees.
The T&G’s food industry leader Brian Revell said: ‘This is excellent news for Sainsbury employees, customers and the public interest. Private equity is a dangerous form of ownership based on debt and extraction of wealth at the expense of good management, jobs and the welfare of employees.’
The T&G had welcomed the strong position taken by the Sainsbury family against a bid by a private equity cartel, including CVC, for the food chain. Two cartel members had backed off, leaving CVC to withdraw today.
‘Hopefully, the private equity bid is now well past its sell-by date, and will become increasingly irrelevant as interest rates rise,’ said Brian Revell.
‘Meanwhile, a firm stand by the Sainsbury family, coupled with determined opposition from 25,000 T&G members and other employees, has halted the threat to an important British company.’
Drivers at Tesco’s distribution depot at Livingston in Scotland, who start a strike action ballot this Monday, were sent a strong message of support by their colleagues in the Transport and General Workers Union today.
Shop stewards representing over five thousand key workers at Tesco’s main distribution depots rejected the supermarket chain’s “divide and rule” tactic. At the close of their meeting in London, they agreed to launch a national campaign against Tesco to defend against changes to their pay, terms and conditions.
Tesco is trying to impose new terms and conditions on the 250 drivers, including the de-recognition of the T&G, when the Livingston depot moves just 500 yards across the road. The union has made it clear to Tesco this is unacceptable but heard reports that the company may be planning similar moves in the rest of the UK.
‘The shop stewards were very clear that they saw the attack on their colleagues in Scotland as a first step by Tesco against all the plants,’ said Ron Webb, T&G national secretary for transport. ‘The reports we had from the rest of the country strongly indicated that Tesco are aggravating the concerns of our members.’
The shop stewards representing drivers and warehouse staff at Doncaster, Didcot, Chepstow, Middlewich and Belfast met today in London along with the drivers’ representatives from Livingston.
They have agreed to co-ordinate a national campaign to highlight the way Tesco is seeking to drive down costs at the expense of employees.
Mr Webb said attempts have been made to find a resolution through establishing a national agreement but Tesco has rejected such a solution. He said a major sticking point was the insistence by Tesco of a ‘no-strike’ agreement in any deal.
‘Tesco need to be in no doubt that we don’t do “sweetheart deals”,’ added Mr Webb. ‘We will deal with this company’s arrogance and forthright attitude and stand up to be counted on behalf of our members.’
The T&G also confirmed that it has extended an invitation to local politicians in the Livingston area to come and meet the drivers this Saturday. The union’s branch meeting will be held at the Kaim Park Hotel in Bathgate this Saturday starting at 10.00am.
‘With the strike ballot starting on Monday and the proximity of the Scottish elections, I am sure we’ll get a good turnout of politicians wanting to know what is happening to their voters,’ said Tony Trench, T&G regional industrial organiser who is the spokesman for the Livingston drivers.