Why are private equity firms running children’s homes?

Independent companies, many run by private equity (PE) groups, are making millions from children’s care homes while local councils foot the bill. Five of the top six care home providers collectively earned £250 million in the financial year 2022-23 (top provider Caretech does not publish this information). All five are owned by PE firms that load the providers with millions in debt – creating instability in a sector meant to protect the most vulnerable. Macquarie, the former owner of Thames Water, was also previously an owner of Outcomes First, the fourth largest provider in England and Wales. Local authority spending on private children’s homes more than doubled between 2016 and 2023 in real terms to £1.8 billion per year. A fifth of this is driven by demand, but consolidation by PE has limited choice for councils and driven up prices. The number of children’s homes controlled by PE nearly doubled from 2018 to 2023.