Private Equity

Baroness Bennett of Manor Castle Excerpts

Thursday 20th November 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, in following the noble Lord, Lord Leigh, I have to note that capitalism focused on shareholder returns is dependent entirely on the natural world and a functioning society. There are no shareholder returns on a dead planet or in a collapsed society.

I thank the noble Lord, Lord Monks, for providing this opportunity to assess the enormous and wide-spread damage that private equity has done to the UK and the world, with some $13 trillion now held across 50,000 companies worldwide. Their tentacles spread, particularly for the relatively poor, into every aspect of their lives, being their landlords, their electricity and water providers, their providers of travel to work, their employers, their doctors, their debt collectors and even caring, very expensively, for their pets. It is, as has been described in virological terms, a financial pandemic.

The author Megan Greenwell in her book Bad Company focuses on the US and, as she identifies, the death of the American dream which is associated with private equity. If noble Lords have not read it, I recommend it. She tellingly contrasts venture capital, which seeks to invest money mostly in start-ups to support the development of something new, with private equity, which typically buys company outright—often mature and established companies. The private equity aim is to get money out of the company without really caring whether the company makes any money. They are parasitic.

We all know the ways in which they do this, as the noble Lord, Lord Monks outlined: selling the company’s land and buildings, which are frequently bought through high-interest loans from related companies, then charging the company rent to continue to occupy its own premises. Money not already being drained by the interest payments is pumped out in dividends. Those are the returns that the noble Baroness, Lady Stedman-Scott, referred to. Then we see the buyer slashing the workforce, cutting the quality of services and products and it all crashes and burns in a couple of years, as it has in so many cases. Then the private equity firm moves on to the next victim.

As evidence given recently to our own Public Accounts Committee shows, some of the most vulnerable people in our society are suffering the worst as individuals from this model. The Public Accounts Committee inquiry, launched in July 2025, was prompted by National Audit Office research showing that the cost of children’s residential care placements has risen 96% since 2019. It heard from the Children’s Homes Association, which has removed tax-haven based private equity providers from its membership and called them out, pointing out that there are now large national providers with several hundred placements earning windfall profits from the coffers of local authorities that are then shipped straight off to tax havens.

The chief executive of the Children’s Homes Association told the Public Accounts Committee that measures in the Children’s Wellbeing and Schools Bill will not deal with this situation. He asked,

“is there political will to tackle tax haven-based private equity providers?”

I ask the Minister that question directly and non-rhetorically. Will the Government get private equity out of children’s care, out of aged care and disabled homes, where it has been doing similar damage for decades? These were issues raised by the noble Baroness, Lady Moyo.

My second question to the Minister is about the welfare of us all. We continue to see the enormous price paid by the young, the poor and the disabled after the financial crash of 2007-08, caused by the greed and fraud of the bankers. We are now hearing increasing warnings about the risk of it all happening again from multiple quarters: from the AI-fantasy bubble to the crypto mania, but also from the risk of collapse of the private equity model. There are only so many juicy targets from which money can be sucked, and they are drying up as our economies are hollowed out and financialised, with few sectors not already left victim. As the Bank of England’s Financial Stability Report said last year:

“Vulnerabilities from high leverage, opacity around valuations, variable risk management practices and strong interconnections with riskier credit markets mean the sector has the potential to generate losses for banks and institutional investors”.


Natacha Postel-Vinay, an assistant professor at the London School of Economics, said in commentary:

“I think a lot of people do not know exactly what is going on”.


Another question for the Minister is whether the Government can say, hand on heart, that they are confident that the regulators, and they themselves, know what is going on in terms of the financial risks being presented by private equity, particularly in light of the obscurity as outlined by the noble Lord, Lord Davies?

I finish on a message of hope, because I am always looking for hope. One of the reasons I recommend Greenwell’s book is that she talks about the people who are fighting back against the damage done by private equity; the workers and communities who are fighting back. My final question to the Minister is what the Government are going to do to fight back and tackle some of the tax issues that have already been raised by other noble Lords. They are, after all, the Government. Surely, the state of the country and the economy is their ultimate responsibility.