Private equity's grip on public services must be broken
· news
The Guardian view on private equity in the public sector: children’s services must be freed from debt-fuelled takeovers | Editorial
The collapse of disability equipment suppliers has left thousands without essential care, exposing the devastating consequences of private equity’s grip on public services. This is not an isolated incident – it’s a symptom of a broader pattern that has been unfolding for years.
Behind every failed children’s home and collapsed care provider lies a trail of debt, fueled by financial engineering and restructuring to maximize profits at the expense of vulnerable people. In 2025, £24.4bn of public money went to companies controlled by private equity firms – one in every eleven pounds spent on contractors. This is not just about the money; it’s about the values that underpin this system.
Private equity’s business model is built around leverage, rapid restructuring, and exit. This toxic mix makes it ill-suited for services involving councils’ statutory duties and human need. When care providers fail, the consequences are catastrophic: families left to pick up the pieces, workers who have given their all left without support, and taxpayers left with the bill.
The problem is not just about transparency or regulation; it’s a fundamental mismatch between private equity’s values and the public interest. Firms that specialize in financial engineering are ill-equipped to prioritize the needs of children, families, and communities over shareholder interests. These firms have become increasingly dominant in public services, leaving councils struggling to protect their statutory duties.
Research has consistently shown that private owners typically offer lower pay and fewer opportunities for parental involvement than public or non-profit ones. The same ownership model that has left pet owners overpaying by £1bn through veterinary consolidation poses an even greater risk when it comes to disability support and social care – people cannot simply walk away from these services.
To address this issue, the government should legislate to restrict private equity’s role in public services more widely. This could include eliminating sale-and-leaseback arrangements and transferring loans used to buy businesses onto their balance sheets. Wales has already taken steps towards eliminating profit-making from children’s social care altogether; it’s time for the rest of the country to follow suit.
The Children’s Wellbeing and Schools Act 2026 created a beefed-up role for regional commissioners, but this is just the beginning. The government should recognize that firms whose primary expertise lies in financial engineering have no business shaping the lives of vulnerable people.
The stakes are high – and so is the cost of inaction. We can’t afford to wait for another collapse, another devastating failure, before taking action. It’s time to put children and communities first, to prioritize their needs over profits, and to build a public services system that truly serves them. Anything less would be unacceptable.
Reader Views
- RJReporter J. Avery · staff reporter
While The Guardian's critique of private equity's grip on public services is well-taken, we must also examine the role of local government in perpetuating this system. Councils often prioritize short-term cost savings over long-term social responsibility, making them complicit in the financial engineering that leads to care provider collapses. In many cases, councils could be taking a more active role in contracting and overseeing services, rather than relying on private equity firms to manage their statutory duties. By doing so, they might be able to prevent some of these catastrophic failures.
- CSCorrespondent S. Tan · field correspondent
While The Guardian's editorial shines a spotlight on private equity's stranglehold on public services, it's worth noting that one of the more insidious consequences of this trend is the eroding of trust between citizens and local government. As councils increasingly rely on private providers to deliver essential services, residents are less inclined to engage with their communities or participate in governance. This dynamic undermines the very notion of a "statutory duty" to serve the public interest – and ultimately imperils the fabric of our social safety net.
- EKEditor K. Wells · editor
"The article highlights the obvious: private equity's stranglehold on public services is catastrophic for those who rely on them. But what's just as alarming is the lack of accountability from local authorities, which have been sleepwalking into these disastrous contracts in pursuit of short-term cost savings. Until councils are willing to stand up to their corporate partners and prioritize the needs of citizens over shareholder returns, we'll continue to see children's services suffer under the weight of debt-fueled takeovers."