Almost £24.4bn of UK government spending on contractors went to private equity-controlled firms in the year to April 2025, new analysis shows. This amounts to 8.8% of all government contracts, or £1 in every £11 spent on contractors. The findings, published by the Guardian, highlight the growing influence of private equity in key public services including transport, waste management, and healthcare.
Private equity's stake in public services
The analysis, based on procurement data from Tussell, company filings, PitchBook data, and public records, reveals that local councils paid nearly £9.8bn to private equity-backed firms, representing an estimated 10% of their external spending. This includes over £500m to an infrastructure group controlled by CVC Capital Partners, which provides services across water, energy, transport, and telecoms. NHS contracts worth more than £5bn (10.7% of its external spending) went to private equity-backed firms, with top recipients including a business software company jointly controlled by Hg Capital and TA Associates (almost £1bn) and a pharmaceutical services company controlled by Vitruvian Partners (almost £500m).
Concerns over debt and profit motives
Politicians and economists have raised concerns about the 'financial fragility and sharp cost cutting' associated with private equity-backed firms, which often carry high debt levels. Critics argue that the drive for maximum profit creates conflicting interests in running public services. Natalie Bennett, former Green party leader, described private equity as a 'financial pandemic' in British society, stating: 'If you are running something for profit, you’re often not running it for the benefit of the people who need the service.' She added that austerity and ideological assumptions about private sector superiority have fuelled this trend.
Ludovic Phalippou, professor of financial economics at Oxford University, noted: 'The core risk is not just “private equity”. It is for-profit provision, plus high leverage, in an essential service where the state has little room to walk away.' He emphasised that high debt levels make these firms more vulnerable to economic shocks.
Impact on specific sectors
The transport sector is highly reliant on private equity. Arriva, which runs train operating companies and bus routes across the UK, was bought by US private equity firm I Squared Capital in 2024. The Department for Education spent almost £600m (11% of external spending) on private equity-backed companies, including BPP Education Group (controlled by TDR Capital) and Portakabin (bought by Antin Infrastructure Partners in June 2024). Previous Guardian reporting has highlighted private equity's role in childcare, children's care homes, and support services for rape and sexual assault victims.
Industry response
UK Private Capital, the industry body, defended the sector, stating that private equity and venture capital firms 'contribute roughly to 9% of the private sector GDP' and back 'around 13,000 UK businesses, nine in 10 of which are small- or medium-sized enterprises.' They noted that the industry raised £58.7bn in 2025, mostly from overseas investors, and that the largest firms follow the Walker guidelines for disclosure and transparency.
Criticism and calls for reform
Sarah Longlands, chief executive of the Centre for Local Economies, said private equity involvement creates 'conflicting motivations' that drive down service quality. 'That desire for profit maximisation will put downward pressure on the way in which services are operated and run,' she said, adding that local authorities need to be more careful about who they contract with. Bennett criticised the government for not imposing stricter rules, saying: 'The government is trying to manage the mess we have, not chart a route out of the mess.'
