Private Equity

Lord Sikka Excerpts

Thursday 20th November 2025 Grand Committee

[Lord Sikka (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett, and I also thank my noble friend Lord Monks for securing this debate. Private equity’s trail of destruction includes Debenhams, Homebase, LloydsPharmacy, Maplin, Poundworld, Silentnight, Toys R Us, The Body Shop, Southern Cross Healthcare and more. High streets have become economic deserts, thousands of SMEs have been strangled and Governments just wring their hands. Private equity is part of shadow banking and remains unregulated. There are no effective rules about leverage or capital adequacy. Governments are playing with fire, as the next crash will surely come from this sector.

Tax abuse, profiteering, asset stripping and cutting staff and wages are the standard private equity tools. The controlling entity is usually in some opaque offshore tax haven: no tax is paid on dividends extracted from UK operations. Instead of share capital, private equity loads companies with secure debt; this enables it to eliminate a downside risk of shareholding as, in the event of liquidation, it is paid first. Unsecured creditors get little or nothing.

Some years ago, I was asked by the Work and Pensions Committee to look at the liquidation of Bernard Matthews, a well-known poultry company. It was deliberately gutted by private-equity owners: the directors sold the assets and jettisoned all the liabilities, including deficit on the employee pension scheme, to maximise profit. Suppliers, SMEs, employees, local communities and HMRC were harmed. Governments did absolutely nothing. Can the Minister say how many SMEs have been damaged by private equity, and will the Government investigate liquidations concocted by private equity?

The crisis at Thames Water has been deepened by private equity’s cash extraction. Northumbrian Water, Southern Water, Wessex Water and Yorkshire Water are partly or wholly owned by private equity. All have hundreds of criminal convictions and are still allowed to fleece customers. Private equity is devouring ASDA and Morrisons: staffing and wages have been cut to boost profits and investment has been neglected. Large corporations, many controlled by private equity, have 60% of the veterinary market. Vets’ fees have increased at double the rate of inflation. Vets are under pressure to meet financial targets and sell unnecessary appointments to pet owners—that is what vets have told me.

Profit margins range between 16% and 20%. Social care is mainly under the control of companies increasingly backed by private equity. They are extracting £1.5 billion a year for their investors. Private equity-backed fostering agencies provide almost one-quarter of all child fostering places in England. In 2023, the parent company of the UK’s biggest provider, the National Fostering Group, made an underlying profit of £104 million with a profit margin of 21%. That is unacceptable. Profiteering from vulnerable children is what private equity does. Despite the glossy statement, it has no notion of ethics or social responsibility. On 18 November 2024, the Government issued a press release entitled Biggest Overhaul in a Generation to Children’s Social Care. It stated:

“We will crack down on care providers making excessive profit”


and

“put a limit on the profit providers can make”.

A year later, nothing has been heard. Can the Minister tell the Committee when this legislation will be brought to Parliament?

Too many dental practices are taken over by private equity as it seeks to build local monopolies. My dentists—PortmanDentex and Rodericks—are leading players and are controlled by opaque entities from Luxembourg and the Cayman Islands. They are not there for the sunshine. The typical cost of dental treatment at these dental surgeries is three and a half times what NHS dentists charge.

Too many GP surgeries are controlled by private equity. There are pressures on them to increase profit by cutting staff and using unqualified staff. The NHS is increasingly a shell doling out contracts to private operators backed by private equity. Just five firms received thousands of cataract surgery contracts. They have a profit margin of between 32% and 43%. In 2023-24, they received £536 million from the NHS and made a profit of £169 million. It is a matter of great concern that under their 10-year plan, the Government plan to hand more of the NHS to private equity.

Finally, can the Minister explain what the Government are going to do to curb abuses by private equity?