Billions in UK public funds are going to dodgy private equity firms

Billions of pounds in UK public funds are going to private equity firms, which have a reputation for lowering standards for profit. Most alarmingly, these firms are getting money for services supposedly caring for people in vulnerable situations, including children.

Private equity firms profiting from essential services

An extensive Guardian analysis showed that private equity firms have spread into:

• The social care sector. Private equity has developed a “large presence in adult and children’s social care”, including for people with mental health issues or learning disabilities. Residential care giant Four Seasons Health Care was one example of the debt accumulation and collapse that often happens with private equity firms.
• Children’s homes, special educational needs provision, and foster care. The controversies at Compass Community served as an example of ‘maximising assets’ before reselling. And “massive mistakes” there included challenges keeping kids safe and the organisation “treating children like cattle”.
• The NHS. Just in the last year, over £5bn worth of NHS external contracts went to “private equity-backed firms”.
• Nurseries. The Guardian explained that “more than a third of employees in the nursery sector work for a private equity-controlled company” and that “investment funds, including private equity firms, doubled their investment in the sector between 2018 and 2022”.
• Services for “rape and sexual assault victims“.
• The supply of disability equipment.
• Vets (with such firms employing around 35% of veterinary staff in 2024).

Councils handed “almost £9.8bn” between 2024 and 2025 to “companies majority-controlled by private equity firms”. One example of why is waste management, a sector in which one in five people work for private equity firms. Many employees have gone on strike against cuts to wages and conditions.

There’s also a presence in the cleaning and maintenance sector, the transport sector, and petrol stations (of which private equity firms control around 27%). And if you shop at Morrisons, Asda, Boots, WH Smith, or Waterstones (or many other places), you’ll also be adding to private equity profits.

US-style corporate tactics now widespread in the UK

The Guardian reported that private equity firms have exponentially grown their presence in the UK “over the last two decades”. And they’re now “deeply embedded” here, with:

as many as one in eight workers in Britain [being] employed by companies ultimately controlled by private equity firms

Not all private equity firms are the same, but as economist John Kay said:

what has become much more extensive is private equity buying into firms, with the idea that you resell them in three to five years having extracted quite large amounts of money in the meantime

And we shouldn’t underestimate the extent of the operation. Because UK Private Capital, the trade organisation advocating for such companies, has boasted that the UK now has:

the largest concentration of private capital investment’s expertise anywhere in the world outside North America

Why we need to pay attention and fight back

Oxford professor Ludovic Phalippou told the Guardian that:

If society would not tolerate a hospital, care provider or children’s services operator suddenly failing, then we may want stricter rules around debt levels, ownership structures and contingency plans for financial distress.

Sarah Longlands from the Centre for Local Economic Strategies thinktank, meanwhile, insisted:

This is public money, our money, that we’re talking about

And with essential services in particular, Phalippou added:

the state has little room to walk away

Longlands asserted on top of this that local authorities “can’t afford not to” bring key services back into public control, largely because:

When social care goes wrong, it’s hugely expensive for the local authority, for the NHS, for the legal cases that may pile up on the council’s door. So it’s about investing now to save later.

Private equity firms dangerously play around with massive debts and people’s wellbeing in search of profit, putting both service provision and jobs at risk in the process. And as Longlands explained, the companies’ “desire for profit maximisation”:

is why you end up with a scenario where care workers are earning such low amounts.

Former Green Party leader Natalie Bennett has gone as far as to call private equity a “financial pandemic”. And she highlighted that:

Austerity and cutbacks in funding for local councils has absolutely led us here

Charting a route away from the current situation will not be easy, of course, as long as the reigning ideology of austerity continues to dominate in parliament (from the Conservative Party to Labour).

We absolutely need to fight back hard, though. Because the people running key services should always do so first and foremost for the good of the people they serve – not for the profits of obscenely wealthy CEOs.

Featured image via the Canary

By Ed Sykes