July 5, 2007 (LPAC)--In his first press interview since his appointment as Chancellor by British Prime Minister Gordon Brown, Alistair Darling said he was wary of making any knee-jerk changes based on newspaper headlines, to taxation laws concerning private equity funds. He cautioned that such rapid changes could have unintended and undesirable consequences, citing as an example the Sarbanes-Oxley law passed in the United States in the wake of the Enron scandal. That legislation, he says, damaged the economic market, and "London's actually benefited because of that."

Darling said that the City of London financial center "is critically important to, not just London's health, but the U.K.'s health," stressing the strength and stability of the U.K. economy built by Brown during his time as Tony Blair's Chancellor. The rest of the country, he said, "need to realize just how important this part of our economy is, and growing in importance.... 70% of our economy is services."

Other British press commentary on the interview notes that the labor unions and laid-off private equity employees will take issue with these comments; such firms have been accused of too many layoffs and loading companies with debt. The private equity firms have come particularly under scrutiny, the Telegraph reports, for using a loophole to allow partners to pay less tax on their earnings than the national rate.

Similar moves are afoot in the U.S. Congress to change tax law regarding private equity firms, and Darling's comments about Sarbanes-Oxley are as likely directed to the U.S. Congress as to the British population.