Revealed: At least £44m is leaking out of the Welsh learning-disability care system to private equity companies and tax havens

At least £44 million in profits generated from Welsh public spending on learning-disability care have been siphoned off to private equity firms or companies based in tax havens – with the amount growing in recent years despite Wales’ ambition to put people and communities at the heart of social care.

The Centre for Local Economies (CLES) found that, over the five years from 2020 to 2024, an estimated £106 million in profit was taken from the £1.1bn identifiable Welsh public-sector spending on learning-disability care. £44m – 42 per cent – went to providers whose parent companies are based in tax havens and/or are owned by private equity firms.

Researchers say this is a growing issue. They find that – despite the Social Services and Well-being (Wales) Act 2014, which places duties on local authorities to promote social enterprises, co-operatives and third sector organisations in the delivery of social care – spending with for-profit organisations is accelerating while flatlining with not-for-profit providers. The result is that public money in Wales is increasingly flowing towards organisations with higher levels of profit and complex overseas or private-equity ownership structures – companies that “take so much and give little back”.

In fact, today’s research suggests that very little of the public spending examined is returning to local economies in worker wages. Researchers found a stark gap between the pay of senior executives and frontline workers. Directors in for-profit companies were found to be paid between 13 and 22 times average employee pay in recent years – with salaries going up to more than half a million pounds. Meanwhile, directors of not-for-profits earn between four or five times their average employee pay.

What’s more, alongside the £44m in estimated profits, researchers found that care companies were using public funds to spend an estimated £7.69m on interest payments as part of their financing arrangements. This money was generated from Welsh learning-disability care spending between 2019/20 and 2023/24. £7.01m – 91 per cent – was associated with providers ultimately owned by companies based in tax havens and/or by private equity firms.

Dr Sarah Evans, CLES associate director for Wales, said: 

“Today’s findings raise questions about the gap between Welsh Government’s promise that people with learning disabilities should have their voices heard and control over their own lives, and the reality of an increasingly profit-driven care market dominated by companies who take so much and give little back. They reveal a system moving in the wrong direction.

“We need to ask serious questions about whether our commissioning system is delivering the kind of care ecosystem that Wales intends to build”.