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Financial

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Banks

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Categorized | Financial

Labour MP unlikely ally for ‘Mayfair hedge funds’


Posted on November 24, 2016

The UK hedge fund lobby has found an unlikely ally: a Labour MP from an area in Wales known for coal mining.

Chris Evans, who represents Islwyn in Gwent, is forming an all-party parliamentary group to give hedge funds and private equity a voice in Westminster ahead of Britain’s planned departure from the EU.

The group will be an “educational space”, where MPs can learn about topics such as closing the pension fund gap, alternative lending, financing social housing projects and what Brexit will mean for the industry, Mr Evans told the Financial Times.

Hedge funds and the Labour party have not always been the closest of friends. Ed Miliband, the former Labour leader, once called Conservatives “the party of Mayfair hedge funds” and railed against them for taking huge sums from the industry.

Early last year, the party promised a crackdown on tax dodgers and said it planned to hit hedge funds by closing some tax loopholes.

Mr Evans, however, stresses the industry’s importance to the economy. “Britain doesn’t stop in the south-east of England, we want to see this type of growth all over the country,” he said.

While the hedge fund industry largely resides in London, he said alternative investments could affect people across the country because many of their pension funds were invested and there was a need for more alternative sources of lending apart from banks.

Hedge fund managers have generally leveraged power behind the scenes through hefty donations and on individual issues, rather than in a cohesive effort.

“We had a lot of issues with the debate about our industry pre-election where there were a lot of distortions being peddled in the media but especially around the taxation of hedge funds, where there was this kind of idea that the government had given hedge funds a tax break,” said Jiri Krol, deputy chief executive and head of government affairs at the Alternative Investment Management Association, a lobbying group.

“We became very painfully aware that certain myths still prevail and needed to be corrected and addressed, rather than us just responding,” he added.

Spurred on by its member funds, it began contacting MPs in both parties. It came in contact with Mr Evans when he was part of the Labour party’s shadow treasury team as parliamentary private secretary to Chris Leslie, then the chief secretary to the Treasury.

The UK’s departure from the EU is now the group’s main focus. “We had an understanding that something along the lines of an APPG [all-party parliamentary group] would arise long before Brexit, but every time you go down to Westminster,” that is the topic of conversation, Mr Krol said. “Brexit has added another sense of urgency.”

The industry is concerned by the probable loss of passporting rights, which gives funds access to investors across Europe as well as ensuring that EU citizens can continue to work in the UK. Roughly 20 per cent of hedge fund employees in London are from the EU, Mr Krol said.

“We’re still waiting on a road map from the government and, as the days go on, every industry, not just hedge funds, needs some steer from the government as to what it’s going to look like,” Mr Evans said.