New research has revealed that private companies operating care services in three English regions extracted more than £250 million in profits over a three-year period, with a significant portion flowing to private equity firms and companies based in tax havens.
Profits Drain Public Care System
The analysis by Reclaiming Our Regional Economies found that £256 million was made by private companies providing care services between 2021 and 2024 in the North East, South Yorkshire and the West Midlands. The report warns that public money is being rapidly funnelled out of the care system into private hands rather than being reinvested to improve services.
According to the research, more than a third (£87.7 million) of all profits analysed went to care providers owned by private equity companies or with parent companies based in tax havens. The financial extraction included £45 million paid in dividends to shareholders and £33.6 million paid in interest, with up to 60% of interest payments going directly to private equity-owned companies based in tax havens.
Executive Pay Versus Care Worker Wages
The report highlights stark inequalities within the private care sector. Directors of these companies were found to be earning up to 60 times more than the average wage, while frontline care workers frequently received pay below the living wage.
The research team spent months analysing the complex web of financial assets behind companies contracted to provide services including children's homes, adult social care and Send provision. In 2024 alone, local authorities in the three regions spent £3.8 billion to fund these essential care services.
Call for Systemic Reform
The report - titled 'Ending Extraction in the UK Care System' - represents a partnership between several organisations including the Centre for Local Economic Strategies (CLES), the Centre for Thriving Places (CTP), Co-operatives UK and the New Economics Foundation.
Leah Millthorne, the report's co-author and associate director at CLES, highlighted the lack of transparency: "Councils don't have that kind of data on the companies they're supplying to, which is a real problem for taxpayers. They have to tick certain boxes, but what those boxes don't consider is anything to do with a provider's parent company or its financial structures."
The report calls for the government to implement legal limits on profits being made from public services and greater scrutiny of where local authorities spend public money. Rosie Maguire, the report's co-author and manager of policy and programmes at CTP, stated: "It does not need to be this way. The government could act, limiting how much can be taken out of public services and supporting further procurement reform."
The researchers argue that care should function as a public good that strengthens communities rather than as a commodity that drains them of essential resources.
