‘Grim beyond belief’: Serco profits to surge as test and trace records worst ever week

Outsourcing firm expects bumper revenues as Covid-19 case numbers surge and millions of people face tougher lockdown conditions that threaten thousands of jobs

Serco has announced it expects bumper profits after securing an extension to its Test and Trace contract which this week delivered its worst ever performance.  

As Covid-19 case numbers surged and millions of people were placed under tougher lockdown restrictions, Serco told the stock exchange that profits will come in as much as 20 per cent higher than forecast thanks to booming business during the pandemic.

Labour’s Rachel Reeves labelled the announcement “grim beyond belief” and called on ministers to ditch the controversial outsourcing firm which has been involved in a string of high-profile failures.

Serco, which manages test sites and contact tracing call centres for £12bn Test and Trace system, said on Friday that revenues would be £200m higher than expected this year. 

Its announcement came a day after the number of contacts traced by Test and Trace fell to a new low and government scientific advisors warned the system could be overwhelmed if infection rates rise further.

Just 62.6 per cent of close contacts of people who tested positive for Covid-19 in England were reached in the week ending 7 October, down from 69.5 per cent the previous week.

Local health protection teams managed to reach 97.7 per cent of contacts in the week ending 7 October.

Meanwhile, case numbers rose to 18,890 in England on Thursday, hospitalisations due to Covid-19 continued to rise and the government announced tighter restrictions which business leaders warned would threaten thousands of jobs.

"While Serco is raking in the profits, people are paying the price for its failure," Ms Reeves said.

“If the government can't bear to curb its obsession with pouring money into big companies over our local public health teams, it surely can see that this wasteful approach lacks basic common sense and isn't reducing the transmission of the virus.

“It is time to sack Serco and bring in a short circuit breaker, so we can fix test and trace, protect the NHS and get control of the virus.”

Serco's trading profit is expected to be £160m and £165m compared with a previous estimate of £135m to £150m, the company said. Full-year revenue is expected to be around £3.9bn - up from £3.7bn previously predicted.

Serco has faced a barrage of criticism since it won an initial three-month contract to provide test sites and call handlers via a non-competitive tender in May.  

The contract was later extended, which Serco bosses said was "an indication of our customer's satisfaction with the quality of work we have delivered".

Serco is one of five suppliers running fixed and mobile sites where people go to get tested.  It manages about a quarter of the 500 testing locations in the UK and says it has delivered 1.7 million of the 5.7 million tests delivered across all sites.

The firm is one of two operators running call centres which contact people who have been identified by NHS Professionals in contact with others who have tested positive. 

Serco has no role in operating the NHS Covid app the booking of tests, the provision of test kits, the test laboratories, delivering test results, or the identification of contacts of people who have tested positive.

Serco is also benefiting from housing more asylum seekers under a separate government contract. It won the outsourcing work despite having been fined £7m for previous failings.

The company said: "We have also seen increases in the number of asylum seekers we are looking after on behalf of the Home Office, and our new Prisoner Escorting contract has been successfully mobilised.

"We have now secured an extension to the Emergency Measures Agreement on the Caledonian Sleepers to the end of the year."