One pound in every £11 of UK government spending on contractors went to private equity-controlled companies last year, research shows, including key services such as transport, waste management and healthcare.
Politicians and economists have raised concerns over the “financial fragility and sharp cost cutting” created by private equity-backed firms, which often have high levels of debt, and the “conflicting interests” in running public services for maximum profit.
Private equity firms are investment companies that raise money from investors and banks to acquire and manage other companies in order to eventually resell them for a profit. Some have described the rapid spread of private equity across public and private services as a “financial pandemic” the government has yet to fully grasp the scale of.
Exclusive Guardian analysis found that almost £24.4bn of public spending on contractors went to companies controlled by a private equity firm in the year to April 2025 – equivalent to 8.8% of government contracts.
The investigation, based on procurement data provided by the public sector market intelligence firm Tussell, company filings, market data from the financial database PitchBook and reported public information, reveals for the first time the extent of private equity’s stake in Britain’s public services.
Almost £9.8bn in contracts from local councils went to companies majority-controlled by private equity firms, an estimated 10% of their external spending in the year to April 2025. This includes more than half a billion paid to an infrastructure group – providing services across water, energy, transport and telecoms – controlled by the private equity group CVC Capital Partners.
More than £5bn of NHS contracts – 10.7% of its external spending – were paid to private equity-backed firms in the last year.
Among the top recipients were a business software company jointly controlled by the private equity firms Hg Capital and TA Associates, which received almost £1bn. Almost £500m went to a pharmaceutical and healthcare services company controlled by the London-headquartered Vitruvian Partners.
The Guardian has previously reported on the growth of private equity firms behind childcare providers and in the provision of children’s care homes across England, as well as how millions of pounds of taxpayers’ money has been paid to private equity groups to provide support for rape and sexual assault victims.
UK Private Capital, the industry body for private equity and venture capital, said such firms played a vital role in the British economy, boosting productivity, attracting international investments and supporting innovation.
But the potential risks of the growing involvement of private equity firms in the British economy has been highlighted by the collapse of private equity-backed companies in the adult social care home sector as well as well-known high street brands.
The crisis in Thames Water was deepened by private equity’s cash extraction, and private equity has been linked to the fear of closures and job losses in the pharmacy sector, and the creation of “childcare deserts” in poorer neighbourhoods of England.
The new analysis also found that the transport sector was highly reliant on private equity. Arriva, which runs several train operating companies and hundreds of bus routes across the UK, was bought by the US private equity firm I Squared Capital in 2024.
Almost £600m of the Department for Education’s external spending (equivalent to 11%) went to private equity majority-backed companies. This included BPP Education Group, which is controlled by funds managed by TDR Capital, and Portakabin, which was bought in June 2024 by the French-based Antin Infrastructure Partners.
In response to the Guardian, UK Private Capital said 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 argued that the industry raised £58.7bn in 2025 – the vast majority from overseas investors – which “fuelled growth” of businesses across the UK. And they said the largest private equity-owned businesses in the country were subject to the Walker guidelines for disclosure and transparency in private equity.
Natalie Bennett, a former Green party leader and author of Change Everything: How We Can Rethink, Repair and Rebuild Society, said she believed private equity had become a “financial pandemic” in British society.
“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,” she said. “Austerity and cutbacks in funding for local councils has absolutely led us here, but more than that, it’s been a triumph of ideology.
“We’ve accepted this ideological assumption that the private sector must be better. But we’re talking about the filthy rich. And it’s the most vulnerable who are paying.”
She criticised the government for not imposing stricter rules to clamp down on private equity profit-making in the children’s care sector. “The government is trying to manage the mess we have, not chart a route out of the mess. But [private equity] will twist and dodge and turn and find a new way to play the system,” she said.
Ludovic Phalippou, a professor of financial economics at the University of Oxford’s Saïd business school, is widely recognised as one of the most influential academic voices in the world of private equity. His criticism of the sector has often attracted pushback from some of the biggest firms.
He said the problem did not lie with private equity in and of itself, but with the way in which these firms often had a disproportionately large amount of debt that made them more vulnerable to shocks.
“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, and probably low competence in writing contracts and negotiating prices,” he said.
Sarah Longlands, the chief executive of the thinktank Centre for Local Economies, said private equity involvement in public services created “conflicting motivations” that were driving down the quality of services.
“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.”
She said there needed to be more care and curiosity by local authorities over who they were giving contracts to. “Even with a lot of government politicians, there’s an assumption that this is the way things are run now. But I think there are some really serious questions about how far we can afford to be agnostic about the economic model behind this.”
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Methodology: How the Guardian estimated the involvement of private equity firms in the British economy
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The Guardian’s investigation into the scale of private equity firms in the British economy combines procurement data provided by Tussell, employment ONS data, information from the financial database PitchBook, publicly available data from Companies House and information obtained via the companies’ annual accounts.
Using data from Companies House, the Guardian was able to build the group structure for thousands of UK companies, as well as identifying the ultimate controlling party for each of them as disclosed in their annual accounts.
We then used a Large Language Model (LLM) to collect information about each ultimate controlling party. A team of five journalists manually verified the responses from the LLM by checking the information against the annual accounts, the companies’ own websites, news articles and databases that specialise in private equity markets, like PitchBook. This process allowed us to identify which parent companies were private equity firms or companies that were majority-backed by a private equity firm.
The final list of companies ultimately controlled by private equity was then matched with public procurement data for the financial year to April 2025 provided by Tussell to find how much money went to pay for services provided by private equity-controlled firms.
The Guardian also gathered information from Companies House about the primary sector of the economy (SIC codes) within which company operates. Using an LLM, the team also extracted the average number of employees as declared by each company in their annual report. A team of three people manually verified the results.
When available, the analysis includes the company’s figure of the average number of employees. However, a small proportion of companies only published consolidated accounts, which means that the number of employees reported was that for the whole group as opposed to only those working for the company.
On the other hand, a similar proportion of non-dormant companies did not report the number of employees or had not filed any accounts.
To avoid double counting employees when the company reports consolidated accounts, we subtract from the group figure the number of workers listed in the annual accounts of other companies in the group. International employees of the largest employers were also removed – when possible – to only count British workers.
The final number of deconsolidated employees was later aggregated by sector using the SIC codes and compared to employment data from the ONS to calculate the proportion of people that are employed by a private equity-controlled company.
The Guardian methodology has some differences with similar analysis carried out by the Bank of England and the consultancy company EY in the number of companies and the period analysed, the approach with consolidated accounts and the type of companies included (the Guardian excludes venture capital and private credit companies).
The Guardian analysis is a snapshot in time of the involvement of private equity firms in the British economy.
Additional reporting by Pamela Duncan, Yassin El-Moudden, Isaaq Tomkins and Krystina Shveda
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