Private equity firms have gained significant influence over some of Britain's most sensitive public services, including children's homes and social care, according to a new analysis by the Guardian. The research found that approximately £24.4bn of public money went to companies controlled by private equity firms in the year to April 2025, representing £1 in every £11 of public spending on contractors.
Pattern of Failures in Care Services
The year after Compass Community was sold by Graphite Capital to another private equity group, Cap10, Ofsted reports revealed the poor state of some of its children's homes. Inspectors who visited two homes in England, previously rated good and outstanding, found “high levels of distress” with both staff and children feeling unsafe. Cap10 denies that standards fell following the change of ownership.
In 2025, a disability equipment supplier's collapse left people without wheelchairs and hoists essential for daily living. Four Seasons, once one of Britain's biggest care home providers, failed under £1.5bn of debt. The pattern is clear: financial engineering creates risks that vulnerable people are left to bear.
Extent of Private Equity in Public Services
More than a third of the £24.4bn came from council spending in specialist areas such as social care and special education, as well as essential services including cleaning and waste. Research on nurseries has found that private owners typically offer lower pay and fewer opportunities for parental involvement than public or non-profit ones.
The risks extend beyond public services. The competition authorities found that veterinary consolidation left pet owners overpaying by £1bn. But when the same ownership model enters disability support or social care, the stakes are higher: people cannot simply walk away.
Why Private Equity Is Unsuitable for Public Services
Private equity is built around leverage, rapid restructuring and exit. That makes it especially unsuitable for services involving councils’ statutory duties and human need. “When a care provider fails, the damage cannot be contained by market choice,” the Guardian editorial states. “It falls on families, workers and the state.”
Transparency rules should be tightened. The interests of workers and taxpayers should be considered along with shareholders, when the markets being regulated are not for consumer goods such as shoes but for healthcare and even childhood homes.
Calls for Legislative Action
Sale-and-leaseback arrangements, under which businesses lose ownership of their assets, should be eliminated from public services. So should the practice of transferring the loans used to buy a business to the balance-sheet of the business itself.
The Children’s Wellbeing and Schools Act 2026 created a beefed-up role for regional commissioners. Wales is in the process of eliminating profit-making from children’s social care altogether. The government should legislate to restrict private equity’s role in public services more widely. Firms whose primary expertise lies in financial engineering should not have so much sway over vulnerable people’s lives.
