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July 18, 2024
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Private equity groups collecting millions to run UK government-funded sexual assault referral centres | Private equity

Millions in taxpayer funds are being paid to private equity-backed firms to provide specialist support services for rape and sexual assault victims, with charities concerned at the profits being made by investors on these contracts, the Guardian can reveal.

The government contractor G4S and Mountain Healthcare Ltd, which is ultimately owned by a private equity group set up by the former boss of the outsourcing group Capita, run 26 of the 50 NHS- and police-funded centres in England that support thousands of child and adult victims of sexual assault.

In the last financial year, the two companies collected £16m in payments between them for running sexual assault referral centres (Sarcs), according to government figures. The centres help thousands of victims each year by providing psychological and medical services and gathering forensic evidence for criminal prosecutions.

Mountain has paid at least £15m in dividends since it was acquired by its current owner in 2018, from revenues that appear to have come mainly from the provision of public services, analysis of published contracts and company accounts suggests.

Working with the thinktank the Centre for Health and the Public Interest, the Guardian has used freedom of information requests, NHS data and company accounts to examine the private revenues being made from this highly sensitive public service.

Critics question whether companies should be able to run vital support centres for victims at a profit, using scarce taxpayer money.

Andrea Simon, the director of the End Violence Against Women Coalition, said that the findings gave a “real pause for thought” given how “chronically underfunded frontline specialist support services are”.

Labour MP Stella Creasy said she was writing to the public accounts commission and National Audit Office to ask them to look into these contracts as a “matter of urgency”.

“No one can feel comfortable at the idea anyone running a service for victims of sexual crimes could be making a substantial profit from these services so we should all be deeply concerned by these figures and the risk the needs of the shareholders are being prioritised.”

A third of NHS England’s budget for Sarcs was spent with G4S and Mountain last year, an investigation by the Guardian and the thinktank the Centre for Health and the Public Interest found. The other 24 centres in England are run by the NHS, or jointly with police.

The amount spent with the two private contractors has increased by 81% in two years, from £8.8m in 2020-21 to £16m in 2022-23, according to NHS data. The rise is thought to be due to inflation, and to an increase in patients, with more people seeking treatment, although the health service says recorded figures on service users are unreliable.

The numbers – provided in response to a question in parliament – show G4S and Mountain treated about 12,000 people last year, over half of all people who attend Sarcs.

Mountain was acquired in September 2018 by Literacy Capital, a private equity group founded by Paul Pindar, the City executive who spent two decades at the helm of Capita, a company he transformed into one of the largest holders of government contracts in the UK.

Pindar, his wife and his son own 39% of the shares in Literacy, according to company filings.

Company accounts show Mountain paid £15.1m in dividends between 2018 and 2022. In 2019, the dividend paid was £5.5m – a third of its total income that year. On average, it has paid more than £3m every year in dividends since 2018, 10 times the £296,000 paid in 2016 and 2017 under its previous owner.

Analysis suggests a majority of Mountain’s £23m income in 2021-22 (the most recent year for which there are public accounts), came from Sarcs, and other public sector activities including healthcare for people in police custody.

FoI data shows the number of clinics operated by Mountain has risen from 15 to 19 since it was acquired by Literacy.

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Pindar’s investment vehicle donates 0.9% of its net assets every year to literacy charities in the UK, and says it has given more than £8.5m since its creation in 2017.

For G4S, revenues from Sarcs are a tiny part of the business. The company’s ultimate owner is private equity-backed Allied Universal, a multinational that is the world’s largest provider of security guards, with 800,000 employees globally. Among Allied’s shareholders are the private equity group Warburg Pincus and A&M Capital.

A spokesperson for G4S Health Services said: “Building on 11 years of expertise, G4S – working with partners – delivers high quality care at our SARCs. This is reflected in our positive CQC reports.” CQC stands for Care Quality Commission, the health and social care regulator.

Mountain Healthcare and Literacy Capital have been approached for comment.

The Unison general secretary, Christina McAnea, said sexual assault centres “shouldn’t be run for the benefit of shareholders” but rather “focus on helping vulnerable women”.

“Private equity firms have an appalling track record when it comes to delivering crucial services. This business model should have no place whatsoever in the provision of public services,” she added.

Private equity firms are increasingly moving into managing key public services such as residential care for elderly people, fostering and childcare. Previous Guardian analysis of Ofsted-registered nurseries found that in 2022, 7.5% of all nursery places were fully or partly controlled by investment companies, including private equity and venture capital firms – up from 4% in 2018.

While government funding was going to Sarcs, Simon said many rape crisis centres, which are still not-for-profit, are on the brink of collapse and in need of more financial support. She asked: “Can any profit-driven service be trusted to work in the best interests of victims and survivors, or will they prioritise profit margins?”

David Rowland, the director of the Centre for Health and the Public Interest, said: “It is difficult to understand how a private equity investor could envisage making a profit out of providing services to people who have suffered sexual assault. Any money taken out of these services in the form of dividends is money which cannot be used to pay staff or to look after those affected.”

NHS England did not provide a comment.

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