Private equity firms have significantly increased their influence over UK public services, securing £24.4 billion in government contracts in the year leading up to April 2025, according to new analysis. This represents a notable 8.8% of all government spending on external contractors, with an estimated £1 in every £11 directed towards private equity-controlled companies.
The investigation, based on procurement data and financial records from Tussell, PitchBook, and company filings, reveals the extensive reach of these investment companies across critical sectors such as transport, waste management, and healthcare. Local councils have allocated almost £9.8 billion in contracts to private equity-majority controlled firms, accounting for approximately 10% of their external spending.
The National Health Service (NHS) has also seen a significant portion of its external spending directed towards private equity-backed entities, with over £5 billion in contracts – 10.7% of its total external spending – paid to such firms in the last year. Notable recipients include a business software company jointly controlled by Hg Capital and TA Associates, which secured nearly £1 billion, and a pharmaceutical and healthcare services company managed by Vitruvian Partners, receiving almost £500 million.
While UK Private Capital argues that private equity firms are crucial for the British economy, fostering productivity, attracting international investment, and supporting innovation, concerns have been raised by politicians and economists. Critics point to the high levels of debt often carried by private equity-backed firms, leading to what they describe as “financial fragility and sharp cost cutting.” This creates potential “conflicting interests” when public services are run with a primary focus on maximising profit for investors.
The risks associated with this growing involvement have been underscored by past collapses of private equity-backed companies in the adult social care sector and prominent high street brands. Furthermore, the role of private equity has been highlighted in the deepening crisis at Thames Water due to cash extraction, fears of job losses in the pharmacy sector, and the emergence of “childcare deserts” in less affluent areas of England.