Labour criticises Serco profit projections as “grim beyond belief”

Labour’s Rachel Reeves has described it as “grim beyond belief” that outsourcing firm Serco is set to exceed profit expectations for the year due to its much-criticised work on the government’s test and trace scheme.

Reacting to news that the company expects to make over £160m this year – millions more than expected – the Shadow Chancellor of the Duchy of Lancaster said the government should “sack Serco”.

Labour has called for a two- or three-week national ‘circuit break’ lockdown to avoid the chaos and confusion caused by regional restrictions and the new three-tiered system that has been criticised for being unclear.

Trade union UNISON was also critical of Serco’s new profit forecasts, with its assistant general secretary saying “shareholders shouldn’t be rubbing their hands with glee when the test and trace system is a catastrophe”.

Commenting on the new profit figures, the Shadow Chancellor of the Duchy of Lancaster said: “This is grim beyond belief. 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.

“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 announced today that it expects a profit of between £160m and £165m this year, tens of millions of pounds more than its initial estimates of £135m to £150m. Its overall revenue is expected to be £3.9bn – up from a predicted £3.7bn.

The firm has faced widespread criticism for its role in the government’s Covid test and trace system as it has been found to be worse than local public health teams at tracing those who have been exposed to coronavirus.

In the Welsh system run by local health authorities, over 85% of contacts are reached according to the most recent figures. In England, where much of the system is handled by private firms, just 69% of contacts are being reached.

Labour has also been critical of the fact that 85% of Serco’s work on contact tracing services has been sold on to third-party companies. Serco and the government refuse to disclose the identity of the other firms.

MPs on Wednesday resoundingly rejected an opposition day motion from Labour that called on the government to drop firms such as Serco from its test and trace system and instead expand the role of public health teams.

Trade unions have also been critical of the role of private companies in the government’s coronavirus response, with public service union UNISON warning that any Covid vaccine roll-out must not involve outside firms.

Reacting to Serco’s new profit forecasts, UNISON’s Christina McAnea added: “It was a mistake from the start for the government to have involved private companies, instead of the NHS and local authorities.

“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. The government must immediately hand this service to public health bodies and do likewise for the roll-out of any vaccination programme.”

It was revealed by Sky News this week that the UK government is being charged day rates of around £7,000, the equivalent of £1.5m annual salaries, by management consultants to work on Test and Trace.

Serco and Sitel, the two private firms hired to handle test and trace, are set to receive over £1bn for their work on the scheme. Serco receives 40% of its overall income from contracts running UK public services.

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