Private equity tightens its grip on UK public services

Almost £1 in every £11 spent by the UK public sector on private contractors now goes to companies controlled by private equity firms, according to new research that has reignited concerns over the growing role of profit-driven investors in essential public services.

The analysis suggests nearly £24.4 billion of public contract spending in the year to April 2025 flowed to private equity-backed businesses, raising fresh questions over accountability, financial resilience and value for taxpayers.

Public Services Under Growing Pressure

The research, based on procurement data and company ownership records, found private equity-backed firms are deeply embedded across transport, healthcare, education and local government services.

Local councils accounted for almost £9.8 billion in spending with private equity-controlled contractors, while the NHS awarded more than £5 billion in contracts to such firms. Critics argue that highly leveraged ownership structures can prioritise returns for investors over long-term service quality.

Warnings Over Debt and Profit

Economists and campaigners have warned that heavy borrowing and aggressive cost-cutting associated with some private equity ownership models could leave vital public services exposed during periods of financial stress.

Ludovic Phalippou, Professor of Financial Economics at the University of Oxford, said the biggest concern was not private equity itself but the combination of profit-driven ownership, high debt levels and essential public services where governments have limited alternatives if providers fail.

Industry Defends Its Record

UK Private Capital rejected suggestions the sector poses a systemic risk, arguing private equity plays a vital role in supporting businesses, investment and productivity across Britain.

The organisation said the industry backs around 13,000 UK companies, attracts billions in overseas investment and operates under transparency rules for its largest businesses.

Calls for Tougher Oversight

Campaigners say the findings expose the need for tighter scrutiny of who delivers publicly funded services. They argue local authorities and ministers should pay closer attention to ownership structures before awarding major contracts.

The debate comes as pressure grows on the Government to balance private investment with public accountability, particularly in sectors such as health, social care and transport where service failures can have immediate consequences for millions of people.

‘Financial pandemic’: £1 in every £11 spent on UK public contractors goes to private equity