Serco profits set to soar as contract for ‘broken’ Test and Trace system is extended

Outsourcing giant Serco has said it expects profits to exceed expectations in 2020 as a result of the uptick in work since the global pandemic. Updating the London Stock Exchange in an unexpected announcement, the company said the excess profits could now be returned to shareholders, with a consultation on dividend payments under way.

The company which is leading the UK government’s Test and Trace scheme said it had achieved strong revenue growth in the three months from July, highlighting extensions to contracts to provide test sites and call handlers. Test and Trace has been described as a “broken system” and ‘unfit for purpose’.

Satisfaction

Serco bosses claimed its results were “an indication of our customer’s satisfaction with the quality of work we have delivered” as part of the £12bn committed by the government to the system.

The company added:

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.

Serco runs the notorious Yarl’s Wood detention facility. In 2018, Andrea Needham wrote for The Canary:

Yarl’s Wood – run by private company Serco – holds up to 410 people. These are mostly women and adult family groups. An undercover investigation by Channel 4 in 2015 found detainees being referred to as “animals”, “beasties”, and “bitches”. In 2016, the Home Office rejected a request for information about sexual abuse in Yarl’s Wood because it could damage Serco’s “commercial interests”.

Earlier this year, over 100 women went on hunger strike at the centre. Their demands included an end to “systematic torture”, proper healthcare, and no more indefinite detention. Many women have shared their experiences of Yarl’s Wood on a website run by the detained voices collective.

Green MP Caroline Lucas said in the same year:

My abiding thought as I come away from there is just how so much misery, so much despair, so much hopelessness, is contained within the walls of the Yarl’s Wood detention centre.

Just off the train from Yarl’s Wood detention centre. I’m still in a state of shock really, but what I saw there was nothing less than psychological torture. pic.twitter.com/CXWeEWWJNq

— Caroline Lucas (@CarolineLucas) June 14, 2018

Endless profit

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

Full-year revenue is expected to be around £3.9bn – up from £3.7bn previously predicted. The announcement comes a day after NHS Test and Trace recorded its worst ever week for contact tracing as cases of coronavirus continue to rise.

It’s understood senior government officials have expressed concern that Test and Trace could become “overwhelmed” if case numbers get too high. New data showed 62.6% of close contacts of people who tested positive for coronavirus (Covid-19) in England were reached through the system in the week ending October 7. This was the lowest weekly percentage since Test and Trace began, and is down from 69.5% the previous week.

Serco added in the statement on Friday morning that it has also benefitted from contracts in the US, Australia, and the Middle East.

Go public

For cases handled by local health protection teams, 97.7% of contacts were reached and asked to self-isolate in the week to October 7. For those handled either online or by call centres, 57.6% of close contacts were reached and asked to self-isolate.

The way the system operates has been the subject of a political storm, with Labour highly critical of the use of outsourcers and calling for Serco to be ditched from the operation.