Private care providers in three English regions earn £250m in three years | Social welfare

Private companies operate care services in only three regions England have taken profits of more than £250m in three years, with more than a third going to providers owned by private equity firms or companies based in tax havens.

A new analysis from Reclaiming Our Regional Economies warns that public money is quickly flowing out of the care system and into the hands of private companies, rather than being reinvested in improving services.

The report, published on Wednesdayfound that in the North East, South Yorkshire and the West Midlands, between 2021 and 2024, private companies providing care services made a profit of £256 million.

“Politicians and experts tell us that there is simply not enough money to invest in social care and that we cannot afford to borrow more to build a better system,” the report says.

“The truth is that there is money in the care system, but too much of it is flowing out. Rather than simply being provided as a public service, care systems are gradually becoming more like a commodity or product that can be bought and sold over time.”

The report found that this had spread to “all aspects of our livelihoods” and had caused “the erosion of public values ​​in what should be public goods and services”.

More than a third (£87.7m) of all profits analyzed were made by care providers owned by private equity firms or parent companies based in tax havens.

A total of £45m in dividends was paid to shareholders and £33.6m in interest, of which up to 60% went directly to companies owned by private equity and based in tax havens.

Directors of these companies earned up to 60 times more than the average wage, with salaries for frontline nurses often below the living wage.

The report – Ending extraction in the UK care system – is part of a partnership between the Center for Local Economic Strategies (CLES), the Center for Thriving Places (CTP), Co-operatives UK and the New Economics Foundation.

It called for the government to set legal limits on profits from public services and to exercise greater control over the use of local government funds.

“Councils don’t have such data on the companies they supply, which is a real problem for taxpayers,” said Leah Millthorne, co-author of the report and deputy director at CLES.

“You have to tick certain boxes, but what those boxes don’t take into account has something to do with a provider’s parent company or its financial structures or the way it makes profits. And local authorities are basically overwhelmed because they’re forced to subcontract these services out.”

The team behind the report spent months analyzing the complex web of financial assets behind the companies tasked with providing services, including children’s homes, adult social care and send provision.

In 2024, local authorities across the three regions spent £3.8 billion funding these care services.

“We know there is a deeper problem when big companies are taking out even more money for debt payments and rent, but our systems are set up – from the national to the local level – to have no accountability for where public money goes,” said Rosie Maguire, co-author of the report and manager of policy and programs at CTP.

“It doesn’t have to be this way. The government could act to limit extraction from public services and support further procurement reform so that more local government contracts go to organizations that reinvest in care, rather than investors. Care should be a public good that strengthens our communities, not a commodity that drains them.”