Private equity companies have quietly expanded their presence in UK public services, including elderly care homes and fostering for vulnerable children, with unintended consequences for staff and service users. One example is Compass Community, a private equity-backed firm providing children's homes, fostering, and Send schooling. Sold by Graphite Capital to Cap10 in May 2024, the company faced pressure to rapidly open homes and take on children to maximize sale value, despite lacking adequate staff.
Staff and Children Under Pressure
Multiple sources inside Compass Community reported that during the sale preparation, they were told to open homes and fill them quickly, even without managers. One staff member said: 'There was growing pressure to open homes and fill those homes, despite having no managers. We started this strategy which was basically: employ anybody. There were massive mistakes being made across the organisation because there were so many people who didn’t know what they were doing.' After the sale, the 'frenzy just doubled' as new owners sought rapid expansion, leading to intolerable pressure, staff leaving meetings in tears, and many homes left without managers.
Ofsted Reports Show Decline
Ofsted inspections documented rapid deterioration. A Compass home for six children, rated 'good' in 2023, was rated 'inadequate' in April 2025. Inspectors described the home as 'chaotic', with children climbing on the roof and engaging in sexual intercourse 'unnoticed by staff'. High levels of distress led to self-harm, children going missing, and 'riot-like' behaviour. Another home for eight children, rated 'outstanding' in 2023, was also marked 'inadequate' in April 2025 without a manager. Staff were unable to keep children safe, and decisions to move children were made without understanding the home's situation. Restraint use was not properly recorded, and staff frequently took time off due to feeling unsafe. Some care homes were closed at short notice, and frontline staff faced disciplinary proceedings.
Private Equity Model Under Fire
Economists and politicians have raised concerns about private equity's takeover of British services, with some calling it a 'financial pandemic'. Sarah Longlands, chief executive of the Centre for Local Economic Strategies, said: 'This is public money, our money, that we’re talking about. But the way in which private equity companies are structured puts downward pressure on a service, and ends up creating an environment which is really bad for workers. There’s increasing evidence about the lack of quality of care that’s being delivered, too.' Experts also worry about private equity firms going bust, as they often use borrowed money, leaving services with high debt and less resilience.
NRS Healthcare Collapse Leaves Families Stranded
NRS Healthcare, owned by Graphite Capital since 2019, was one of England's biggest suppliers of disability equipment. It collapsed into administration in August 2024, leaving hundreds without vital mobility aids or stuck in hospital. Sources said a cyber-attack contributed, but concerns arose that the company undercut competitors with unsustainable low bids to expand rapidly. Before collapse, NRS worked with 44 local authorities. Graphite Capital denied this, citing 'macroeconomic and sector-specific challenges' like higher operating costs, inflation, and a rise in the national living wage. The impact hit families like Nataleigh Buckley and her 10-year-old son Laigan, who has spinal muscular atrophy. After an operation, Laigan was left without a suitable wheelchair for months. Buckley said: 'He lost everything. He was still recovering from his surgery and he couldn’t change his position when he was uncomfortable or in pain, he couldn’t move himself from one place to another – he had to fully rely on everybody, which impacted his mental health.'
Charity Steps In but Warns Against Norm
Newlife, a charity for disabled children, sourced a new wheelchair for Laigan. Ceara Chamberlin, campaigning and public affairs manager, said: 'While charities like us are stepping in, this must not become the norm, as statutory services should be equipped to meet these essential needs. The collapse of NRS exposes deep systemic vulnerabilities in how community equipment services are commissioned and delivered.' Longlands argued that bringing services back under local authority control, though expensive, is necessary: '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.'
Company Responses
Cap10 said it 'strongly rejects the suggestion that standards declined at Compass Community following the change of ownership in 2024, or that decisions about children’s care are driven by financial concerns.' A spokesperson noted that new leadership appointed in 2025 identified areas where standards were not met, closed or suspended homes, strengthened safeguarding, and introduced more rigorous recruitment. They stated that 88% of Compass homes are currently rated 'good' or 'outstanding', compared to a national average of 83%. Graphite Capital said allegations relating to Compass Community are 'completely false' and that 'the welfare of children was always the organisation’s overriding priority.' Regarding NRS Healthcare, they said the company did not undercut competitors, and its financial issues were due to a structural funding gap from Covid, inflation, and rising national living wage.
