Sector by sector, private equity is increasingly infiltrating UK public services, posing risks highlighted by the collapse of Southern Cross in the past. Complex financial structures and profit-maximizing strategies are common, with a focus on low-tax jurisdictions and financial engineering. The Common Wealth think tank’s upcoming report reveals how private equity is expanding its presence in essential services like transportation, healthcare, and education.
Private equity sees lucrative opportunities due to guaranteed operations and profits in essential services, such as the railway industry and social care. Despite concerns about high profit margins and lack of public investment, government oversight and action have been limited. Critics argue that businesses exploit loopholes to extract funds from vital services, exacerbating the issue of tax evasion and opaque accounting.
The situation is not unique to the UK, with global implications due to tax havens and multinational corporations’ ability to avoid taxes. The Common Wealth report emphasizes the harmful effects of austerity combined with tax avoidance on public services. Urgent action is needed to prevent further exploitation of taxpayer-funded services and ensure accountability in the private equity sector.