Private Firm Serco Wins New £322m Test And Trace Contract

Labour says it's the "same old story" of big money tenders for outsourced companies.
Mark Kerrison via Getty Images

New health secretary Sajid Javid was swiftly plunged into a new row over Test and Trace after it emerged that outsourcing giant Serco had been handed a fresh £322m contract.

Labour hit out after the company revealed that it had won a bid to run testing sites across the country for another 12 months.

The news came just days after a damning National Audit Office report concluded that Test and Trace was still failing to “deliver value for taxpayers”.

The independent spending watchdog found that the £37bn service – which was run by Tory peer Dido Harding until earlier this year – had lost track of nearly 600 million Covid tests and had an over-reliance on private consultants.

Serco revealed on Monday that they had signed a new deal with the Department of Health and Social Care (DHSC) to operate regional, local and mobile testing centres in England and Northern Ireland following a competitive tendering process.

The value of the new 12-month contract, with the option of a six-month extension, could change significantly due to its flexibility to levels of demand in coming months, they added.

The deal means Serco will continue operating around 20% of sites across England and Northern Ireland, including drive-through and walk-in test centres, alongside mobile sites.

On June 14, Serco said it expects underlying trading profit to hit £200 million this year – £15 million more than previously forecast due to the extension of Covid-19 restrictions.

Government figures have shown that centralised contact tracing, which has been operated by firms like Serco, have lower contact rates than local authorities.

Shadow health minister Justin Madders said: “We have a new face in charge of the health service but it’s the same old story with the Tories handing out mega contracts to the failing Serco.

“Just days after a damning report into Test and Trace’s failures, the government confirms it is business as usual by handing out more taxpayers’ money to this company instead of supporting local public health teams to do this work.”

But Serco chief executive Rupert Soames said: “We are proud of the part we have played in building and operating the UK’s highly successful Covid-19 testing infrastructure.

“From a standing start in March 2020, NHS Test & Trace has grown a network of regional, local and mobile sites which have delivered over 18.5 million individual tests, an average of 51,000 tests a day.

“We are delighted that the DHSC has selected us to continue to support them in providing these services for at least the next 12 months.”

He added that the new contract is unlikely to increase profits beyond previous guidance set out earlier this month.

Serco has faced criticism over the large profits it has made from the pandemic and its decision to start paying a dividend to shareholders.

Labour leader Keir Starmer said in February it was “outrageous” that dividends would be reintroduced this year.

He tweeted at the time: “Taxpayers’ money shouldn’t be given to Serco’s shareholders via dividends.

“The government should have placed Test and Trace in the hands of our NHS and local communities.”

Serco has defended its role, pointing out it repaid previously claimed furlough cash and shared a £5 million bonus among 50,000 frontline workers.

Bosses previously revealed they banked £400 million in extra revenues from Covid-19-related services, although profits from the pandemic were minimal – at £2 million.

They also said other services in parts of the economy that had shut were hit.

DHSC has been approached for a comment.