Unsafe hands: The private companies botching Britain’s coronavirus response

Tackling the Covid-19 pandemic isn’t the first time bloated government outsourcing contracts have backfired. But, writes Miles Ellingham, it really doesn’t have to be this way

Outsourcing giant Serco has been criticised for running a test and trace system that is less effective than local public health teams (PA)

Last week a close friend fell ill, and I had to get a Covid-19 test. NHS slots were all booked up, so I bought an overpriced kit at the local pharmacy.  Having swabbed myself, I was directed to drop it off in a sealed box at a Randox Health in central London.

The Randox offices are a corporate lobby of glass and plastic, with televisions playing stock footage of doctors performing myriad vague medical procedures. The place was unstaffed but for a single receptionist talking on the phone. Every now and then, couriers hurried in looking confused, demanding a drop-off or a pick-up before being directed elsewhere. When it was time to drop off my biohazard, the receptionist walked me behind a little S-shaped alcove and I saw it… there on the floor, a little pile of sealed, untested samples strewn like socks on the rug of a child’s bedroom. The receptionist threw my sample on with the rest and I left – hoping it would find its way to the lab in Northern Ireland.  

I can’t stop thinking about that pile of samples. It feels somehow symbolic of the government’s response to coronavirus – in which billions of pounds worth of contracts have been handed out, often without any competitive tender, to private companies.  

The state and its once effective health institutions have been stripped meticulously since the Thatcher years and, with the copper wirings gone, it’s been assumed that to effectively mobilise for a global pandemic, corporations and private actors need to play their part. As early as April, health secretary Matt Hancock took the time in one of his daily Covid briefings to boast: “I want to take this moment to applaud the private companies who have been involved … They have really stepped up to the mark and I am grateful for each and every one.”

However, these companies are, for the most part, doing a terrible job. And we should have expected as much: even a cursory glance at some of their records show a pattern of mismanagement and ill-judged cost-cutting.  

Randox Laboratories, to which my test (and fee) found its way, was given a £133m contract for its testing services. The company was founded in 1982 by Dr Peter Fitzgerald, a polo-playing multimillionaire (£255m according to the Sunday Times Rich List) from Antrim. Fitzgerald has worked hard to cultivate a brand image for the company, one synonymous with Britishness. Randox has been endowed with royal visits, an OBE for its founder and, since 2017, has sponsored what is now officially titled the Randox Health Grand National. Equally British is the fact that since 2015 Randox has employed a former minister – Owen Paterson– as a consultant. Paterson, the Conservative MP for North Shropshire, is reputedly paid £100,000 per year for 200 hours’ work. 

And why might Randox need such consultants?

Part of the answer may lie with their chequered history of (mis)handling forensics tests for the police. In 2017 Randox came under investigation following allegations that scientists at their Manchester testing site had manipulated data. The National Police Chiefs Council’s forensics lead, James Vaughan, called the scandal the “biggest breach of integrity in forensic science”. The manipulation reportedly affected over 10,000 test results and 42 of the UK’s 43 police forces. The inquiry resulted in at least 90 convictions– some of which will have destroyed lives – being overturned or dropped. Many of those affected filed compensation claims. Randox issued a statement revealing it had acted as “whistleblower” after discovering manipulation by its own staff in January 2017.

We might cringe at a company like Randox helming our Covid testing programme, but their £133m pay cheque pales in comparison to what the taxpayer has given to Edenred, the French company (turnover €1.6bn) behind Ticket Restaurant and other “prepaid corporate services”. Edenred was handed £234m by Gavin Williamson’s Department for Education to provide £15-a-week vouchers to feed close to a million pupils eligible for free school meals. Williamson, of course, a former fireplace salesman, is not best known for his judgement; during his time at the Ministry of Defence (he was sacked as defence minister by Theresa May), he floated the idea of “mounting guns on tractors as makeshift mobile missile launchers”.

Since receiving the contract, Edenred has been accused of “woeful preparation” and “a catalogue of technical problems” that caused children to go hungry and humiliated parents. An explanatory article in trade magazine The Grocer paints a worrying picture in which cheaper retailers – the ones frequented by more working-class demographics, such as Aldi and the Co-op (which is often the only food retailer in many isolated communities), were left out of the scheme. Despite “weeks of furious lobbying”, The Grocer reported, “Department for Education officials and Edenred refused to allow the discounters and the Co-op to take part in its scheme when it launched, citing technical incompatibility. However, in a questionable move considering the demographics involved”, it did allow upmarket M&S and Waitrose to take part.

Most troubling of all, however, is the government’s lucrative contractual agreements with the outsourcing giant Serco Group, a company that has made a fortune sublimating government services across just about every ministerial department – health and social care, transport, justice, border security, defence, citizens services, you name it.  

They were, of course, an early port of call in the Covid crisis and were awarded a £108m contract from the Department of Health and Social Care to “oversee ‘non complex’ contact-tracing cases in England”. The contract was not put out to open tender and was met with a rare push-back from Labour. The shadow health secretary and shadow cabinet office minister both wrote to Hancock asking him “not to hand Serco any more money”.  

I want to take this moment to applaud the private companies who have been involved … They have really stepped up to the mark and I am grateful for each and every one

Matt Hancock

It’s hard to explore any British government operations over the past decade without stumbling on Serco’s fingerprints. And their record ranges from the dismal to the disgraceful. 

Perhaps the best publicised was Serco’s handling of the UK’s prison system. In 2019, the company was fined £19.2m for asking government to foot the bill for the tagging of prisoners – many of which, it turns out, had either left the country or, in some cases, were dead. The contractor admitted three offences of fraud and two of false accounting at its electronic tag subsidiary, Serco Geografix. According to the Serious Fraud Office director Lisa Osofsky, “Serco Geografix engaged in a concerted effort to lie to the Ministry of Justice in order to profit unlawfully at the expense of UK taxpayers”.  After the scandal, a freeze was imposed on Serco bidding for government work.  

Serco’s tagging scandal was disturbing, but for sheer moral malpractice it isn’t a patch on the firm’s record at Yarl’s Wood, a detention and immigration removal centre for mostly female immigrants and refugees, which they’ve overseen since 2007. Serco’s stewardship of Yarl’s Wood has been peppered with allegations of sexual abuse, a revelation compounded by the fact that the women housed there are often already fleeing violence and rape. In 2016, The Independent reported that detainees hung a makeshift banner painted on a bedsheet from a window, with a frantic message to the outside world alleging “Yarl’s Wood officers in relationships with vulnerable detainees”.  

And it gets worse – and more costly.    

Back in 2012, Serco was awarded a contract to take over supervision of Community Payback Schemes in London. For £37m, Serco gained oversight of over a million hours of unpaid community service by 15,000 offenders across the capital. The company expected to cut costs, but quickly found that there wasn’t any slack.  

This was the beginning of a clearly idiotic idea: the privatisation of the probation services, which had worked reasonably well under public control for a century. The ministerial brainwave was, this time, down to Chris Grayling.

According to a source close to the probation services at the time, Serco’s cutbacks not only adversely effected proper running of the service but blunted the rehabilitation aspects of justice. Across the board, skilled, humane running of Community Payback was jettisoned in pursuit of profit. For example, Serco almost immediately got rid of most of the vans that chaperoned workers to and from jobs. This had a negative effect on offenders’ attendance, as many of those jobs were located in far-flung locations. “Everything in probation is linked,” the source told me. “There was no overspending, there was no fat which could be trimmed – that was one of the fallacies of privatisation.”

Serco also cut the workshops that previous trusts had reserved for offenders with learning difficulties, mental health problems or that couldn’t be placed elsewhere; unsurprisingly, many of those specific offenders then couldn’t cope. Work that Community Payback did with charities and voluntary services was undermined as some of those beneficiaries “desperately had a problem with the private aspect” of the new reality and their work was relinquished.  

The probation officers were in the firing line too. When employees are transferred due to a business takeover, or from the public and private sector, they are supposed to receive protections under Transfer of Undertakings (Protection of Employment) regulations, known as TUPE. These regulations preserve the terms and conditions of members of staff, making sure they can’t be dropped without warning or have their salaries cut. However, Serco was able to sidestep TUPE protections by reorganising. This, it must be said, was all allowed for by poor provisions in the contract that the Ministry of Justice signed off, but it took a particularly unscrupulous contractor to zero in on the loopholes.

Tragically, that same stingy attitude to technocratic managerialism is now being applied to our test and trace efforts. Without effective test and trace, a second wave of Covid was almost inevitable, and this will be fundamentally the fault of the government’s bloated private contracts. A BBC report in the summer gave an early warning that only “around 50 per cent of people from the same household as a person infected with Covid-19” were even contacted. Serco has, again, been at the centre of the controversy (as early as May they had to apologise for accidentally sharing the email addresses of almost 300 contract tracers). Alongside all this, the government is paying consultants from Boston Consulting Group a day rate of around £7,000, to assist on test and trace.    

It really doesn’t have to be this way. Germany – a country that has received widespread praise for the dexterity of their Covid response – had a much more robust test and trace system because they relied on existing local infrastructure rather than corporate giants. As the BMJ reported, “Civil servants were redeployed to public health from elsewhere and extra staff employed to support local contact tracing. Germany built on existing infrastructure and experience from the outset, unlike England, where local public health departments were overlooked in favour of a centralised system run by outsourced companies.”   

Not so long ago Britain was just as good at responding to health crises on a local basis – even potential pandemics. In the 1970s, a smallpox epidemic was averted in London simply through diligent, localised work on the part of a well-prepared NHS. And this was before the internet. Health officials simply went door to door, called up pubs and took names. It may seem hard to imagine any of that happening now, even with the new digital reality making contacting potential spreaders infinitely easier, but local authorities are actually up for the job.  

In Lancashire, where test and trace initiatives have failed, councils have started taking matters into their own hands. Blackburn and Darwen both established local teams to carry out the track and trace that government contractors had failed to address, and their lead has been followed in the West Midlands, Leicester and Liverpool.  

These are direct rebukes of the top-down, centralised, corporate systems that have dominated the government response to Covid. They show us the direction that we need to travel, in setting up local, community-run and publicly-owned health schemes. Our trust and reliance on corporations to put the public good before the profit motive must be checked – we can’t go on like this, and, what’s more, we don’t have to.

With thanks to Ellie Cook and Tommy O'Callaghan for help with research.