Private equity companies have slowly and invisibly increased their involvement in public services – from elderly care homes to fostering placements for vulnerable children – with some unintended consequences.
Take Compass Community, a private equity-backed firm which provides children’s homes, fostering services and schooling for children with special educational needs (Send).
It was sold by the private equity firm Graphite Capital to another private equity group, Cap10, in May 2024, as part of a well-established model to buy up companies, maximise their assets and sell them on for a profit.
The consequences for staff and children at the front end of its services was huge. Multiple sources inside the children’s home division said that, as they prepared for sale, they were pressed to rapidly open more homes and take on more children, even when they didn’t have the staff to keep up. They claim they were told this was so the company could be sold for the maximum amount of money.
“There was growing pressure to open homes and fill those homes, despite having no managers,” one staff member who worked across multiple homes said. “We started this strategy which was basically: employ anybody. There were massive mistakes being made across the organisation because there were so many people who didn’t know what they were doing.”
Staff said that after the sale, the “frenzy just doubled” as the new owners tried to rapidly increase the size of its new acquisition. They said the pressure was intolerable, many children’s homes were left without managers and people left meetings in tears.
Ofsted inspections of its homes document the rapid descent. One Compass Community home for six children, previously rated “good” in 2023, was rated “inadequate” in April 2025. Inspectors said the home was “chaotic”, and that children were frequently climbing on the roof and were having sexual intercourse “unnoticed by staff”.
“High levels of distress” among the children resulted in self-harm, children going missing and damage to the home, while staff described “riot-like” behaviour from the children who had “lost respect for staff”. It had no registered manager.
Another home for eight children with social, emotional and mental health difficulties was rated “outstanding” in 2023 before being marked as “inadequate” and without a manager in April 2025. Inspectors said staff were unable to keep children safe, and decisions to move children into the home were being made by people with no detailed understanding of what was happening there.
The use of restraint on the children was not being reviewed and recorded properly, and staff were frequently taking time off work due to feeling unsafe.
Sources said a number of care homes had been closed down at short notice, and frontline staff members have been suspended and are facing disciplinary proceedings for failures made during the tumultuous period.
“They’re treating children like cattle, and scapegoating everybody on the way out,” one former staff member said.
Cap10 said it “strongly rejects the suggestion that standards declined at Compass Community following the change of ownership in 2024, or that decisions about children’s care are driven by financial concerns”.
Economists and politicians have raised concerns about the extent to which private equity has taken over British services in both the public and private sector, with some describing it as a “financial pandemic”.
Others have raised alarms at the “conflicting motivations” created by profit-driven private equity companies calling the shots on services run in the public interest.
“This is public money, our money, that we’re talking about,” said Sarah Longlands, chief executive of the Centre for Local Economic Strategies, a thinktank.
“But the way in which private equity companies are structured puts downward pressure on a service, and ends up creating an environment which is really bad for workers. There’s increasing evidence about the lack of quality of care that’s being delivered, too.”
Experts also worry about what happens if private equity firms that local authorities rely on for key services go bust.
Private equity companies often use a lot of borrowed money to amplify the potential return on an investment, meaning the services they acquire are running with high levels of debt – making them less resilient to sudden shocks or market disruption.
NRS Healthcare, owned by Graphite Capital since 2019, was one of England’s biggest suppliers of disability equipment, and collapsed into administration in August last year, leaving hundreds of people without vital mobility aids or stuck in hospital.
It was one of three major companies in England contracted by local authorities to provide equipment such as wheelchairs, hoists and alarm systems to help people with disabilities or health conditions, as well as elderly people, to be able to live independently at home.
Sources in the industry said that although a cyber-attack had contributed to pushing NRS to the brink, there were concerns the company may also have been trying to undercut its competitors by bidding for local authority contracts with low prices that were unsustainable in a bid to rapidly expand. Before its collapse, NRS was working with 44 local authorities.
Graphite Capital denied this and said the company’s financial issues were caused by “macroeconomic and sector-specific challenges”, including higher operating costs, inflation and a rise in the national living wage.
The people who suffered most were those such as 10-year-old Laigan, who has spinal muscular atrophy and was left without a suitable wheelchair for months after an operation, severely limiting his independence.
“He lost everything”, said his mother, Nataleigh Buckley, who lives in Catterick Garrison in North Yorkshire. “He was still recovering from his surgery and he couldn’t change his position when he was uncomfortable or in pain, he couldn’t move himself from one place to another – he had to fully rely on everybody, which impacted his mental health.
“He got really upset because he said he felt like he was more of a burden than he was previously because he couldn’t move himself. We had to get a health psychologist involved because of how low his mental health has dropped.”
Newlife, a charity for disabled children, said it supported a number of families after NRS Healthcare collapsed – including sourcing Laigan a new wheelchair.
“While charities like us are stepping in, this must not become the norm, as statutory services should be equipped to meet these essential needs,” said Ceara Chamberlin, campaigning and public affairs manager at the charity. “The collapse of NRS exposes deep systemic vulnerabilities in how community equipment services are commissioned and delivered.”
Longlands said that although bringing services back under local authority control was considered expensive, arguably we “can’t afford not to do this” as when things go wrong, councils are left to pick up the pieces.
“When social care goes wrong, it’s hugely expensive for the local authority, for the NHS, for the legal cases that may pile up on the council’s door. So it’s about investing now to save later,” she said.
Cap10 said new Compass Community leadership, appointed in 2025, identified areas where standards were not met, and closed or suspended homes, strengthened safeguarding and introduced more rigorous recruitment in response.
“The Ofsted reports referenced reflect previous leadership gaps and periods of transition, often during intervention to address issues robustly and safely,” a company spokesperson said. “Today, 88% of Compass homes are currently rated ‘good’ or ’outstanding’, compared to a national average of 83%.
“We continue to invest heavily in additional therapeutic provision, staffing, training and safeguarding systems.”
A spokesperson for Graphite Capital said they strongly reject the allegations relating to Compass Community and that they are “completely false”.
“The welfare of children was always the organisation’s overriding priority. Any suggestion that homes were opened or children admitted without appropriate staffing, oversight and regulatory processes in place is categorically untrue,” they said.
In regards to NRS Healthcare, the company said: “At no point during Graphite’s stewardship did NRS undercut competitors by bidding for local authority contracts at unsustainable prices. The company’s financial issues were the direct result of a structural funding gap created by external macroeconomic and sector-specific challenges.
“Initially, Covid led to higher operating costs and increased contractual demands from [local authorities]. After this, further cost increases of 20% from inflation and 37% from the rising national living wage far exceeded price increases provided by local authorities.”
