11 March 2021

Is test and trace a £37bn Serco failure? It’s a bit more complicated than that…


Yesterday’s report from the Public Accounts Committee on the Covid test and trace system (NHST&T) did not make for very edifying reading.

The criticisms and complaints came thick and fast, but it boils down to this: it’s very expensive and there’s little sign it has reduced infections.

On the expense side, the committee acknowledged that setting up a new system from scratch was a costly business, but said NHST&T was still too reliant on extravagantly paid consultants and temporary staff. That outlay might be justified if it had done what it was supposed to when it was set up in May, and prevented a further lockdown – but we’ve had two lockdowns since then, so it self-evidently hasn’t.

Capacity is another issue. On the one hand, tracing staff have often been left with little work to do, on the other, the testing system has “never met its target to turn around tests taken face-to-face within 24 hours”.

Accountability has also been a problem: although test and trace releases data, the committee says they “do not provide an overview of the speed of the process from beginning to end (“cough to contact”) and thus do not allow readers to understand the overall effectiveness of the programme”.

And that effectiveness has been undermined by the “isolate” part of the Government’s Covid strategy being separate from NHST&T. A lack of compulsion for people to isolate, coupled with inadequate sick pay provision (as set out in this CapX piece) has only made it harder to control the virus’ spread, hence the repeated, lengthy lockdowns.

The Serco meme

We ought, however, to separate these important criticisms from the ‘meme’ version of test and trace. I’m referring to the false but very popular idea that NHST&T is actually being run by one company, Serco.

None other than Jeremy Corbyn typified this with a question in Parliament the other day:

“If £37bn can be found to pay Serco for a failed track and trace system, surely the money must be available to pay NHS staff properly…”

Ordinarily we’d just dismiss this stuff out of hand, but such is Corbyn’s celebrity, it’s worth raking him over the coals a bit here, especially as he continues to refer to ‘Serco Test and Trace’ on his Peace and Justice Project website.

Either Corbyn is completely ignorant of the way test and trace works, or he is deliberately peddling misinformation to drum up hits (heaven forbid!). I leave that to your judgment, but given the inanity of some of his previous pronouncements, it actually wouldn’t surprise me if he genuinely thinks one company runs the entire test and trace programme.

Just to spell it out, Serco does run some of the testing centres and does some of the contact tracing. However, as the PAC notes, it is one of 217 other private and public organisations working on more than 400 different test and trace contracts. It’s a public/private programme, so while there are private companies paid to undertake services, so are local authorities, Public Health England, civil servants and military staff.

That might well be a ‘too many cooks’ problem, but it certainly isn’t a case of one company doing all the work. (Corbyn clearly hasn’t been peering over the Serco accounts either, or he’d have noticed that the company’s total revenue for 2020 was about £4bn, its current market capitalisation is under £2bn and 75% of its profits come from outside the UK.

A waste of money?

Nevertheless, the charge that £37bn is being frittered away on an ineffectual system is obviously worth thoroughly interrogating..

First it’s worth noting that £37bn is the total spending envelope for two years of the programme – £22bn in 20/21 and another £15bn in the coming financial year, not what has been spent so far.

Indeed, a recent National Audit Office report found that the Government had only spent £4bn up to October of last year (those figures will be updated soon in its spring report). That doesn’t mean the Government won’t end up spending all that money, but NHST&T as it stands is not £37bn-worth of a programme. Again it’s worth pointing this out when influential figures like former FT editor Lionel Barber are claiming that “the cost of Covid test and trace is to date a staggering £37bn”, because that’s not true.

The way the spending is divvied out is also important. The Government has not done a good job of communicating how much of the spend is on testing, as opposed to tracing. Indeed, while the problems with tracing have been all too apparent, over 80% of the total spend is on testing, where the UK is actually doing pretty well – we’ve done around 100 million tests in total and can now do over 1 million in a single day. Again, it’s worth repeating this point because some people still seem to think the Government has spent tens of billions on nothing more than a misfiring app and some call centres.

Now, none of this is to exculpate ministers. The fact that the tracing system did not stop lockdowns is clearly a grave, expensive failure – not just of the system itself but of other policies like opening up foreign travel last summer, encouraging people back to work and university campuses and not locking down earlier when cases were on the rise.

The report also points to a degree of complexity and, frankly, opacity to analysing the effectiveness of the programme that should worry anyone concerned with taxpayer value.

But it is to say that we should look at what has actually been spent and what it has been spent on properly, without succumbing to glib, misleading soundbites that make the entire thing sound like a boondoggle when the reality is much less clear-cut.

We might also add that as the pandemic evolves and keeping tabs on new variants becomes the most important aspect of our Covid strategy, having a well-oiled testing system alongside our world-class genome sequencing may end up looking like a pretty good investment.

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John Ashmore is Editor of CapX.