THE GUARDIAN newspaper on Sunday reported in an exclusive analysis of the extent of private equity companies takeover of UK public services found that almost £2.4 billion of public spending on private contractors went to companies controlled by private equity firms.
For every £11 of government spending on private contractors, £1 went into the pockets of private equity controlled-companies in the last year.
This included vital services like transport, waste management, health and social care.
In the past, economists and some politicians have raised serious concerns about the ‘financial fragility and sharp cost cutting’ used by private equity backed firms and the ‘conflicting interests’ involved in them running public services for maximum profit.
Private equity firms raise huge amounts of debt by borrowing money from investors and banks.
This debt is then used to buy and control other companies with the intention of selling them off in a few years.
The profit is maximised by stripping the companies bought to the bone, cutting wages and equipment before flogging them off.
The Guardian report reveals for the first time the true extent of private equity’s stake in key UK public services.
This found that nearly £9.8 billion of contracts from local councils went to companies controlled by private equity firms in the year up to April 2025.
This included over half a billion paid to a company that provided services across water, energy, transport and telecoms.
Over £5 billion of NHS contracts was paid out to private equity backed firms in the last year.
Behind the scenes these private equity companies have been increasing their involvement in public services targeting elderly care homes through to fostering placements for vulnerable children.
Nearly £600 million of the Department for Education’s external spending went to private equity majority-backed companies.
This rapid expansion of take-over by highly indebted private equity firms in crusicial sectors of the British economy carries with it serious risks.
Natalie Bennett, formerly a Green party leader, told the Guardian that she believed private equity had become a ‘financial pandemic’ and that ‘We’ve seen a massive explosion of this. And fundamentally if you are running something for profit, you’re often not running it for the benefit of the people who need the service’ adding ‘it’s the most vulnerable who are paying’.
Ludovic Phalippou, a professor of financial economics at Oxford University, told the Guardian the problem was these firms relied on large amounts of debt making them vulnerable to economic shocks.
Sarah Longlands, chief executive of the Centre for Local Economics thinktank, said: ‘That desire for profit maximisation will put downward pressure on the way in which services are operated and run, which is why you end up with a scenario where care workers are earning such low amounts.’
For years these private equity firms have been encouraged to take over all the public services by previous Tory governments and by the Starmer Labour government.
Starmer and Labour chancellor Rachel Reeves have championed the policy of private enterprise turbo-charging UK capitalism’s collapsing economy throwing open the NHS, and welfare state to be pillaged by the privateers who, backed by huge debt, take on services in order to strip them and sell them on for a profit.
Those that fail to survive being cut to the bone and unable to return the profit demanded are simply left to collapse.
In the case of vital social services like children homes, NHS centres and water companies, the working class is forced to pick up the bill while the bankers and financiers walk away with their profits intact.
With world capitalism facing a massive debt crisis, these equity firms that rely on debt to make their profits are extremely vulnerable.
The working class will never accept being forced to pick up the bill when these companies collapse.
Workers must demand their trade unions take action by recalling the TUC conference to organise a general strike to bring down the Labour government and go forward to a workers government – a workers government that will expropriate the bosses and bankers and build a socialist planned economy that will provide for the needs of all.
This is the way forward!
