Leading accounting firms, among the biggest beneficiaries of the private equity boom, have thrown their support behind the industry, which has endured sharp criticism from unions and politicians.

Both the GMB Union and Peter Hain, one of the leading candidates for the Labour Party deputy leadership, have accused the industry of asset stripping, greed and taking advantage of tax rules not available to rivals.

Ernst & Young and BDO Stoy Hayward, backed private equity firms against the attacks this week.

Simon Perry, global head of private equity at Ernst & Young, said: ‘Tax relief is not granted on interest paid by private equity firms alone. It is on interest paid by any company and a function of the tax system in most developed economies. Private equity firms paid more than £4bn of corporation tax in 2006.’

BDO Stoy Hayward managing partner Jeremy Newman, said: ‘There are a lot of businesses in the UK that would not have survived, or not grown as much or been as successful were it not for private equity. Private equity plays a very important role in the UK economy,’ said Newman.

Perry added: ‘Private equity employs 20% of the UK working population. It has been one of the main reasons for the economic and productivity boom in the UK.’

Newman and Perry acknowledged that the industry could improve its transparency and public disclosure, but said steps were being taken to make improvements.

These moves come as the Treasury select committee announced an investigation into the industry.

Despite the public comments from E&Y and BDO, other firms declined to comment. Deloitte and KPMG offered no comment, when contacted by Accountancy Age this week, while PricewaterhouseCoopers did not return calls

The British Private Equity and Venture Capital Association (BVCA), the industry trade body, formed a working party last week headed by Sir David Walker, a former Bank of England director, to ‘examine ways in which levels of disclosure in companies backed by the UK private equity industry could be improved’.