£1 in every £11 spent on UK public contractors goes to private equity, research shows
A Guardian investigation reveals that nearly £24.4bn or 8.8% of UK government spending on contractors went to private equity-controlled companies last year, raising concerns about debt levels and profit-driven service delivery.
According to a Guardian investigation, one pound in every £11 of UK government spending on contractors went to private equity-controlled companies in the financial year to April 2025. The total amount reached nearly £24.4bn, equivalent to 8.8% of all government contracts.
The analysis, based on procurement data from Tussell, financial database PitchBook, and Companies House records, reveals for the first time the extent of private equity's involvement in British public services. Local councils paid nearly £9.8bn (10% of their external spending) to private equity-backed firms, while the National Health Service (NHS) paid over £5bn (10.7% of its external spending).
Major recipients include a business software company jointly controlled by Hg Capital and TA Associates (nearly £1bn) and a pharmaceutical and healthcare company controlled by Vitruvian Partners (almost £500m). In transport, Arriva, which operates train and bus services, was bought by US private equity firm I Squared Capital in 2024.
Politicians and economists have raised concerns about the "financial fragility and sharp cost cutting" created by private equity-backed firms, which often carry high debt levels. Former Green Party leader Natalie Bennett described the trend as a "financial pandemic," arguing that profit motives conflict with public service quality.
Oxford University professor Ludovic Phalippou noted that the core risk is not private equity itself but high leverage combined with for-profit provision in essential services where the state cannot easily walk away. Sarah Longlands, chief executive of the Centre for Local Economies, said private equity creates "conflicting motivations" that drive down service quality, such as low wages for care workers.
The industry body UK Private Capital defended private equity, stating that such firms contribute about 9% of private sector GDP and back around 13,000 UK businesses, nine in ten of which are small or medium-sized. The industry raised £58.7bn in 2025, mostly from overseas investors.
