Gordon Brown has called for "justice and equity" in taxation

Private equity firms have been buying up some of the UK's best-known names and have been criticised amid fears they will strip assets and cut jobs.

They also have been accused of using loopholes to pay too little tax, with the rate sometimes as low as 10%.

Mr Brown said that there needed to be "justice and equity" in taxation.

So far this year, private equity deals have been worth about �489bn ($974bn).

Tax row

From what Gordon Brown told our conference, we conclude that the fat cats are losing the argument on tax Paul Kenny, GMB general secretary

Speaking at a meeting of the GMB trade union on Tuesday, Mr Brown said that a review into the private equity industry was expected to report its findings soon, and would comment on whether or not companies were exploiting loopholes.

Paul Kenny, general secretary of the GMB and a vocal critic of private equity firms, was optimistic that changes would come.

"From what Gordon Brown told our conference, we conclude that the fat cats are losing the argument on tax," he said.

This latest round of criticism was sparked by comments from Nick Ferguson, chairman of SVG Capital, a private equity firm and fund management company.

Mr Ferguson said that some of the biggest names in private equity paid a lower rate of taxation than their office cleaners.

At the centre of the latest questioning is the payment of tax on carried interest.

Private equity executives pay taxes on their earnings and bonuses, but a large part of their earnings comes from carried interest, or the 20% slice of profits they can claim once they have paid back their investors.

This money is classed as a capital gain, and as such is subject to a tapering tax level. Critics say it should be charged at a normal tax rate.

Negative effect

So far, Mr Brown has been very supportive of private equity, seeing it as a driver of growth in the City of London.

Should there be large changes to tax regime then it "would have an effect, on the people and the firms", said Peter Linthwaite, chief executive of the British Venture Capital Association.

At the same time, private equity firms have hit back at critics saying that they have not been buying companies to run them into the ground, and instead want to grow them and make them more profitable, improving staff prospects.