The Guardian has published an editorial warning that private equity's growing role in Britain's public services, particularly children's homes and social care, poses unacceptable risks to vulnerable people. The newspaper's new analysis reveals that approximately £24.4bn of public money—or £1 in every £11 of public spending on contractors—went to companies controlled by private equity firms in the year to April 2025.
Private equity failures harm the vulnerable
The editorial highlights multiple cases where private equity ownership led to deterioration in service quality. Compass Community, a children's homes provider, was sold by Graphite Capital to another private equity group, Cap10. The following year, Ofsted inspections found 'high levels of distress' in two homes that had previously been rated good and outstanding. Cap10 denies that standards fell after the ownership change.
In 2025, a disability equipment supplier collapsed, leaving 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 editorial states: 'The pattern is clear: financial engineering creates risks that vulnerable people are left to bear.'
Widespread impact across 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 found that private owners typically offer lower pay and fewer opportunities for parental involvement than public or non-profit ones.
The editorial argues that private equity's model—built around leverage, rapid restructuring and exit—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. It falls on families, workers and the state,' the piece states.
Calls for tighter regulation
The Guardian calls for several regulatory changes: transparency rules should be tightened; sale-and-leaseback arrangements should be eliminated from public services; and the practice of transferring loans used to buy a business to the balance-sheet of the business itself should stop. The editorial notes that the Children's Wellbeing and Schools Act 2026 created a beefed-up role for regional commissioners, and Wales is eliminating profit-making from children's social care. It urges the government to legislate more widely to restrict private equity's role in public services.
