Private equity firms taking millions in profits from care sector new analysis reveals

Private companies operating care services in just three regions of England have taken more than £250m in profits in three years.

A new report, Ending extraction in the UK care system, published today (12 November) by Reclaiming Our Regional Economies (RORE) reveals how public money is being siphoned out of the care system rather than reinvested to improve services.

In 2024 alone, £3.8bn was spent by local authorities to fund care services in the North East, South Yorkshire and West Midlands combined authority regions. Yet not all of that investment is reaching those it is designed to support.

Between 2021 and 2024:

• £256m of profit was made by companies providing care services in these regions
• Over a third of those companies are owned by private equity firms or companies based in tax havens (or both)
• £45m was paid out in dividends to shareholders
• £33.6m was paid in interest, up to 60% of which went straight to private equity and tax haven owned companies

Directors of these companies earned up to 60 times more than the average wage, while frontline care workers were often paid below the living wage.

The analysis was carried out by the RORE programme, a partnership between Centre for Local Economic Strategies (CLES), Co-operatives UK, the Centre for Thriving Places (CTP) and the New Economics Foundation (NEF).

Leah Millthorne, report co-author and associate director at CLES, said: "We all know there may come a time when we or someone we love needs care. Yet it is clear that too many people across the UK are not receiving the dignity and support they deserve. 

“The vast majority of local authority budgets is spent on care services, but far too much of it is leaking out of the system, extracted as profit and investor returns, instead of providing better services and fair pay for workers.

“It does not need to be this way. The government could act, limiting how much can be taken out of public services and supporting further procurement reform so that more local authority contracts go to organisations that reinvest in care, not investors. 

Author Ann Cleeves, best known for the Vera and Shetland series of novels which have been turned into series for television, has backed the report’s findings. She said: “I hadn't realised the extent of the problem and the way the system seems devised for the profit of investors rather than the benefit of the children. 

"This report shows just how much money is siphoned away from the people who need it. Imagine how many lives could be changed if this cash were channelled into providing counselling, treatment and care. The long-term financial savings would be enormous, not just for the stretched local authorities paying these outrageous costs, but by keeping young people out of the criminal justice or mental health systems.  

Rosie Maguire, report co-author and manager of policy and programmes at CTP, said: "Our new figures are just part of the picture we can get from publicly available information. 

“We know there's a deeper issue with big companies taking out even more money in debt payments and rent, but our systems are set up - from national to local level - to be unaccountable about where public money goes. 

“We at RORE are calling for a move to a more open system which is fairer for tax payers, workers and caring for citizens."