Key facts
- Private equity firms controlled £24.4 billion of UK government spending on contractors in the year to April 2025.
- This represents 8.8% of the total government contracts awarded.
- Local councils spent nearly £9.8 billion on PE-controlled companies, 10% of their external spending.
- The NHS awarded over £5 billion to PE-backed firms, accounting for 10.7% of its external spending.
- The transport sector, including Arriva, is highly reliant on private equity.
One pound in every £11 of UK government spending on contractors went to private equity-controlled companies last year, according to an analysis by The Guardian. This amounts to nearly £24.4 billion in the year to April 2025, covering essential services such as transport, waste management, and healthcare.
Politicians and economists have voiced concerns about the financial fragility, sharp cost-cutting, and conflicting interests of private equity firms operating in public services, which often carry high levels of debt. Some have described the rapid expansion of private equity as a "financial pandemic."
The investigation revealed that local councils awarded almost £9.8 billion to PE-controlled companies, representing 10% of their external spending. The NHS paid over £5 billion to PE-backed firms, or 10.7% of its external spending. Top recipients included a business software company controlled by Hg Capital and TA Associates, which received nearly £1 billion, and a pharmaceutical firm backed by Vitruvian Partners, which received almost £500 million.
The transport sector is particularly reliant on private equity, with Arriva, a major operator of train and bus routes, being bought by I Squared Capital in 2024. The Department for Education also allocated 11% of its external spending, over £500 million, to PE-majority-backed companies.
UK Private Capital, the industry body, stated that private equity plays a vital role in the British economy, contributing 9% to private sector GDP and supporting around 13,000 businesses. However, critics like Natalie Bennett, former Green party leader, and Ludovic Phalippou, a professor at Oxford University, highlight risks associated with profit maximization, high leverage, and the potential for reduced service quality in essential sectors.
Sarah Longlands, chief executive of the Centre for Local Economies, noted that profit-driven motives can lead to downward pressure on service operations and low wages for care workers. She emphasized the need for greater scrutiny by local authorities when awarding contracts.