'£21 in Every £100 Went to Profit': Are Private Equity Firms Draining UK Care?

For every £100 of public money spent on Britain's largest private fostering agencies, £21 was taken as profit last year, according to Common Wealth's 'Who Owns Britain?' data dashboard, which analysed Companies House filings for the four biggest independent fostering agencies in England and Wales.

That figure, drawn from 2024 accounts for companies including the National Fostering Group, Polaris, Compass Community, and BSN Social Care, measured as EBITDA margin, sits alongside a Competition and Markets Authority finding that the 15 largest children's home providers maintained average operating profit margins of 22.6% from 2016 to 2020. The regulator warned in its March 2022 report, published on GOV.UK, that the UK had 'sleepwalked into a dysfunctional children's social care market.'

For families and council taxpayers, those margins translate into direct pressure on local services.

Where the Public Money Goes

Private companies now own 83% of children's homes in England, per the government's own reform announcement in November 2024. Nine of the 10 largest childcare providers are backed by private equity firms, according to the Common Wealth dashboard.

Average fees for a child placement sit at roughly £5,000 per week, per government figures. Placements costing £10,000 or more per week have risen by 1,150% over five years. Some councils now pay £1M a year for a single place. National Audit Office research cited in a November 2025 Hansard debate found that placement costs have risen 96% since 2019.

The Centre for Health and the Public Interest estimates that around £1.5B is extracted from the care home sector annually in returns to shareholders and investors.

What It Costs Families

Without public funding, childcare costs would consume half the average wage, per Commonwealth analysis of OECD data. The government's expanded 30-hour funding puts more public cash into the sector, but when that money flows to profit-driven firms, poorer areas miss out on places and quality, per the Commonwealth dashboard.

Interest costs per bed for the five largest PE-backed care home providers run at £102 per week, around 16% of the weighted average weekly fee, according to CHPI research cited by Common Wealth. That is money servicing debt, not funding frontline care.

When councils overspend on placements, the shortfall lands on local budgets. That means cuts to roads, libraries, leisure centres, and other services funded by council tax.

Parliament Called the System 'Broken'

In the House of Lords on 30 January 2024, Lord Wood of Anfield described the children's care market as 'completely broken', noting that private equity providers were 'making high profits in the sector, increasing their margins and carrying large levels of debt, yet expanding their share of the care market at the same time,' per the Hansard record.

The government responded with a pledge of £259M in capital funding and a new market oversight regime. A separate Hansard debate in November 2025 heard that PE-backed fostering agencies now provide almost a quarter of all child fostering places in England, with the parent company of the largest provider reporting £104M in profit at a 21% margin in 2023.

The government has warned that a cap on profits will be introduced if current reforms fail to 'rebalance the market'. Rosie Maguire, co-author of a November 2025 New Economics Foundation report on care sector profits, said the deeper issue was accountability: 'Our systems are set up, from national to local level, to be unaccountable about where public money goes.'

For taxpayers funding the system, the arithmetic is blunt. Every pound extracted as profit or debt interest from a children's care home is a pound that did not go to the child living in it.