Both buy-out companies and private equity firms should be more open, the report suggests.

Though private equity makes a positive contribution to the economy, it has fuelled suspicion and hostility by failing to recognise its obligations to stakeholder groups such as employees, suppliers and customers, argues Walker, a former chairman of financial services firm Morgan Stanley.

The report recommends voluntary guidelines for buy-out firms and private equity partners, put forward on a ‘comply or explain’ basis. Buy-out companies with an enterprise value exceeding £500 million should report ‘to an enhanced standard’, filing annual reports on their websites within four months of the year end, as opposed to the nine months currently required, for example.

Private equity firms should also be more open about their values, business methods, and governance, the report proposes.

Walker draws a clear distinction between private equity and venture capital. The latter, he states, is an important support for new enterprise and is not big nor opaque enough to raise serious concerns.

In response to the document, Wol Kolade, chairman of the British Venture Capital Association, comments: ‘We agree that there needs to be transparency, but there must also be a level playing field between private equity and other private companies.

‘We will also want to make sure that the overall competitive position of the UK as a place to do business is not undermined.’

The report invites feedback on its recommendations from the private equity industry and other interested parties.