Test-and-trace: Higher profits expected by Serco

NHS Test and Trace contractor Serco says it expects profits to exceed expectations this year thanks to coronavirus-related work.

The outsourcing giant said extensions to government contracts had boosted revenues in the three months to July.

The test-and-trace system has been criticised for being less effective than local public health teams.

Labour called Serco's announcement to the London Stock Exchange "grim beyond belief".

The company said in a statement that the excess profits could be returned to shareholders in the form of dividends.

It expects a trading profit, before any one-off costs, of between £160m and £165m, compared with estimates of £135m to £150m.

Its revenue for the year is expected to be around £3.9bn - up from a predicted £3.7bn.

Earlier this year, Serco - one of the biggest private providers of UK government services - was awarded an extension to its contract to provide test sites and call handlers.

Bosses said this was "an indication of our customer's satisfaction with the quality of work we have delivered".

The company said some of the profits came from other sources, including Home Office contracts to house asylum seekers and a new prisoner escorting service, as well as work done in Australia, the US and the Middle East.

The news comes after data released on Thursday showed that, in the week to 7 October, NHS Test and Trace reached only 62.6% of people who have been in contact with someone who has tested positive for coronavirus.

This figure has been falling as the number of cases increases.

Local public health teams, who conduct contract tracing for the most complex cases, reached 97.7% of identified contacts in the same period.

Labour's Rachel Reeves said: "While Serco is raking in the profits, people are paying the price for its failure.

"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."

Echoing her party's call for a short national lockdown, Ms Reeves added: "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."

Shadow health secretary Jonathan Ashworth said the system had "failed".

Unison, the UK's biggest union, said no one should be profiting from test-and-trace.

Its assistant general secretary, Christina McAnea, said involving private companies "was a mistake from the start".

"Shareholders shouldn't be rubbing their hands with glee when the test-and-trace system is a catastrophe. Infections are rising, hospital admissions are soaring, and test-and-trace has just had its worst week ever. No one should be profiting from failure," she added.

She called for the test-and-trace service to be handed over to public health bodies.

A Department of Health and Social Care spokesperson said NHS Test and Trace is "the biggest testing system per head of population of all the major countries in Europe".

The department said the system is "processing around 265,000 tests a day and breaking chains of transmission, with nearly 900,000 people who may otherwise have unknowingly at risk of spreading coronavirus contacted and told to isolate."

"Building the largest diagnostic network in British history requires us to work with both public and private sector partners with the specialist skills and experience we need. Every pound spent is contributing towards our efforts to keep people safe as we ramp up testing capacity to 500,000 tests a day by the end of October," a spokesperson added.