Serco is one of the world’s largest outsourcing companies, employing over 50,000 people and operating across four geographies: UK & Europe, North America, Asia Pacific and the Middle East. The group employs 31,700 people in the UK and delivers services in defence, justice and immigration, transport, health and citizen services.
The company has several non-clinical contracts with the NHS, such as facilities management. For a few years, beginning in 2006, the company moved into the NHS clinical services market, including out-of-hours care and hospital management. However, the company withdrew from the clinical services market in August 2014, following a series of loss-making contracts.
The Covid-19 pandemic has seen Serco gain a number of contracts within the NHS through the emergency procurement rules. These include in contact tracing and setting up of Nightingale hospitals.
Serco’s major business is with public sector organisations worldwide. The company has followed a policy of expansion into every area of the public sector worldwide. The UK provides around 60% of its business. The company’s business in continental Europe began with IT support contracts in Italy, Belgium and the Netherlands, and in the Middle East contracts revolve around the company’s aeronautical, transport and airport technical services expertise. In the Asia pacific region, Serco has operations in Australia and New Zealand, a presence in Hong Kong and in India. Serco entered the North American market in 1993, and is now a leading provider of services to federal government.
In October 2013, following a scandal concerning Serco's UK government contracts for tagging and escorting prisoners, Serco split its UK government contract business into a separate operating business.
In August 2014, Serco decided to move out of the NHS clinical market and focus on the non-clinical contracts. By September 2015, the company had handed over all its clinical services contracts to new providers, often leaving a contract before the end date. The clinical services market has not been an easy or profitable one for Serco; the company reported in late 2015 that on its three major clinical contracts – out-of-hours in Cornwall, Suffolk community health and Braintree Hospital – it had made a loss of about £18 million and two of the major contracts have been dogged by controversy and problems.
For the NHS, Serco’s clinical contracts were associated with cost-cutting, fraud, poor management and inadequate staffing levels, which in at least one contract contributed to the deaths of two children.
Serco has continued to seek non-clinical facilities management contracts with the NHS. In February 2018, as a result of the collapse of Carillion, another facilities management company, Serco took over several of Carillion's contracts with NHS hospital trusts.
In early 2020 during the Covid-19 pandemic, Serco was one of a number of private companies that were awarded lucrative contracts under the emergency tendering rules, the most notable of which was for a test and trace system.
The Health Minister in the current Conservative government, Edward Argar MP, was previously head of public affairs at Serco.
Serco posted revenues of almost £3.9 billion for the 2020 financial year, up 20% (2019: £3.2 billion), and an underlying profit of £163.1 million (2019: £120.2 million).
In February 2021, Serco reported that it had had a good year boosted by its £350 million contract to run Covid-19 test-and-trace programme. As a result it announced that it is to resume dividend payouts after a seven-year interval, with a £17m distribution.
The two top executives at Serco, chief executive, Rupert Soames, and chief financial officer, Angus Cockburn, received pay of £7.4m for 2020, including bonuses worth £5.5m.
For the first half of 2021 Serco has predicted that its profits will jump 50% boosted by its continued work on Covid-19 contracts, including the test-and-trace programme. Serco expects its underlying trading profit for the first six months of 2021 to reach between £120m and £125m, more than 50% higher than a year earlier. In addition, it forecasts revenues of £2.2bn, almost 20% higher than the same period in 2020, about £340m of which being related to Covid-19.
Serco is a public company with shares traded on the London Stock Exchange.
Test and Trace
In 2020, Serco was awarded a contract as part of the trace and test programme for Covid-19 infection monitoring worth £108 m. The contract covers the recruitment of contact tracers. It was awarded under special procurement rules issued in January 2020, under which no competitive tender took place and there was no public tender advertisement. There were also reports that Serco was involved with the setting up and running of the Nightingale hospitals.
Serco's test and trace contract has been widely criticised (see below). The contract was due to end 23 August 2020 and the Labour Party, the campaigning group We Own It, the NHS Support Federation and many others asked for it not to be renewed, but the work to be carried out by local authority teams of contact tracers. In a letter to Matt Hancock, the health secretary, shadow health secretary Jonathan Ashworth and Rachel Reeves, the shadow Cabinet Office minister say Serco’s contract should be paused because it is “ineffective and not fit for purpose”. This contract was renewed in September, however, despite the criticism.
The Covid-19 contact tracing call centre provision contract awarded to Serco was initially worth £108m, but it has now been extended multiple times and could potentially rise to £432m. Separately, Serco has been awarded £45m rising to £90m for a Department of Work and Pensions helpline for people shielding from the virus, £45m for test sites, and £1m to help the Department for Business, Energy and Industrial Strategy to run a business helpline in the light of COVID-led increased demand.
In June 2021 the Department of Health and Social Care extended two contracts for contact tracers with Serco and Sitel by six months for an additional cost of £168m. This latest extension will take them from June up to the end of November 2021. Sitel’s extension will add £102m to its contract, making it worth nearly £398m in total. The extension will cover 4,000 full-time equivalent contact tracers and isolation assurance compliance call handlers from June to the end of August.
The Serco contract extension is for an additional £66m, increasing the total cost of its contract to over £424m. It covers 3,000 FTE contact tracers to the end of August, rising to 4,000 from September to the end of November.
In June 2021, despite the company's poor performance on test and trace, it was awarded yet another contract to run test and trace centres, this time worth £322 million. The contract is for one year with the option for a six month extension. Serco now operates 20% of test sites in England and Northern Ireland.
Although Serco has withdrawn from the clinical services market, the company still has a number of contracts with the NHS in the areas of facilities management, care coordination and business process outsourcing. These contracts are primarily with hospital trusts. Facilities management includes cleaning, catering, portering, security, waste management, switchboard, pest control, staff accommodation, helpdesk and ward housekeeping. Business process outsourcing includes IT, procurement and payroll and pensions management.
Recently signed contracts include a June 2017 contract with University Hospital Southampton NHS Foundation Trust worth £125 million over 10 years and a May 2017 contract with Barts Health NHS Trust worth £600 million over 10 years. The latter contract has already run into problems.
HSJ reports that Serco is set to take over 15 public sector contracts following the collapse of Carillion, of these, five involve NHS trusts. The total value of the 15 contracts paid by Serco will be £29.7 million - £18 million lower than Carillion's deal. These contracts have an annual revenue of £90 million and an average of 14 years left remaining. The hospital trusts involved are:
- Cambridge University Hospitals Foundation Trust;
- Dartford and Gravesham Trust;
- Great Western Hospitals FT;
- North Bristol Trust; and
- South Tees Hospitals FT.
More than 1,600 former Carillion staff provide estates management services across these trusts.
Barts Health NHS Trust
Serco was awarded a £600 million ten year facilities management contract in December 2016 for Barts Health NHS Trust, beginning services in May 2017. Serco ran into problems almost as soon as the company took over the contract. The company scrapped cleaners paid 15-minute breaks and 120 cleaners stopped work until the breaks were restored and Serco scrambled to reverse the change.
In July 2017, 1,000 cleaners, porters, caterers and security staff went on strike for better pay. Serco had raised the worker’s salary in line with the London Living Wage to £9.75 an hour, a move they described as “generous”.
The living wage is the minimum amount calculated than an individual can cover the basic costs of living.
The strikers demanded a 30p an hour increase in pay in line with inflation and an end to proposed job cuts amongst porters at Whipps Cross hospital and a reduction in their overall workload.
The Guardian has reported that some cleaners workload was doubled since Serco took over, some were not provided with the correct cleaning equipment and that workers had to take annual leave to visit the GP for injuries incurred in the job.
The move is widely regarded as a cost-cutting measure by the NHS Trust after the PFI financed redevelopment of the Royal Hospital London and St Barts ended up costing £6 billion more than the development actually cost to build.
The Trust had the largest financial deficit of any UK health trust in 2016 of £135m and the hospital was put under special measures. According to St.Barts, the Serco deal would save “millions of pounds” and the trust has halved its deficit to £69.5m in the 2016-17 financial year.
There have been and still are major concerns with Serco's contracts both for the NHS and other government departments, including prisons and detention centres. The clinical NHS contracts were associated with dangerous cost-cutting measures and under-staffing. In several cases, Serco was awarded a contract but as soon as the company realised it was not making a profit, it attempted to extricate itself from the contract. Companies leaving contracts early increases the cost to the NHS - a new tender for the contract is needed - and cause confusion and instability in the local area.
More recently, Serco's involvement in the test and trace system for Covid-19 has been widely criticised.
Test and trace system failings
In early 2020, the government introduced emergency procurement rules in an attempt to employ companies to carry out vital work with no delays. The rules meant no competitive tender and no transparency for the contracts. Serco was awarded a massive contract to recruit thousands of people to carry out contact tracing for the tracking and tracing operation vital for controlling the virus outbreak. In May 2020, it was found that Serco had already managed to share the email contact details of 300 new recruits for contact tracing. This incident is a matter for the Information Commissioner to investigate as a breach of data protection legislation.
By August 2020, many stories had emerged of how poorly the test and trace system run by Serco and the company Sitel has performed. One of the major criticisms is that although a big fanfare was made of the recruitment of 20,000 contact tracers when the system launched in May, many call-handlers have since come forward to say that they have had little work to do. Although, contact tracing is a specialist skill that needs tact to obtain sometimes sensitive information from sick individuals, the contact tracers recruited by Serco and Sitel had little or no experience and were given minimal training when hired on near-minimum wage.
It was also revealed in August 2020 that just 56% of close contacts handled online or by call centres run by Serco and Sitel, a second private firm used, are being reached. In contrast, the local council's contact tracers in the Blackburn with Darwen area managed to contact 90%, one of a growing number of councils now setting up their own systems, due to frustration with the centralised Serco/Sitel system.
Criticism of Serco's performance in test and trace has continued as its ability to contact people has fallen still further. In October 2020, there were reports that people who may have been exposed to Covid-19 were not being alerted until up to 11 days later due to test and trace delays. In contrast, council teams continue to outperform the national service, reaching up to 99% of people – compared with just under 60% reached by call centre staff.
In late October 2020, reports appeared that Serco has suddenly promoted level 3 call handlers (mainly students and school-leavers with little training) to level 2 clinical contact caseworkers (normally clinician Band 6 level working as part of a team of “experienced clinicians”). The unqualified students now have as their tasks “conducting a public health risk assessment”, “providing public health advice” and “using your clinical knowledge to help escalate complex cases”.
A report in The Guardian noted that these “experienced agents” are 18 years old and that the “appropriate training” for the magical transformation to “experienced clinician”, lasted just four hours and was conducted remotely. The report notes that many of these 'upskilled' contact tracers were not asked if they wanted a change in role and many are now really struggling.
Breast cancer helpline fiasco
In May 2018, Serco was criticised for the way it was running a breast cancer screening hotline. The hotline was set up by the governemnt as a computer error meant 450,000 women between the ages of 68 and 71 did not receive letters inviting them for a final breast cancer screening. However, women contacting the hotline were being connected with call-handlers who had had only one hour’s training and are relying on a cheat sheet of symptoms. The call-handlers were employed by Serco at call centres based in Glasgow, Liverpool and Newcastle.
Staff at the call centres said they are “disgusted” at the way it is being operated and described scenes of chaos as call volumes rose from 5,000 to 10,000 in two days. The staff said the rush to set up the hotline led them to fear mistakes could be made in the handling of women’s cases as they were not medical professionals and had received so little training.
Cornwall out-of-hours contract
In April 2006 Serco was awarded a five year contract to provide out-of-hours service in Cornwall and the Scilly Isles valued at £6.1 million. In 2011 the contract was renewed for a further five years valued at £6.4 million. Prior to 2006 the contract was run by a consortium of local GPs for £7.5 million; Serco’s bid was considerably cheaper and the consortium failed in its bid to gain the contract in 2011. However, the contract did not run smoothly and by 2013 Serco was trying to extricate itself from the contract. The company eventually left the contract in May 2015, almost eighteen months early. Following information received from whistleblowers and investigations by the Care Quality Commission (CQC) Serco’s OOH service in Cornwall is now known to have been badly managed and frequently under-staffed, and was a contributory factor in the deaths of two children.
A major problem was the introduction of a new cost-saving NHS IT system to the out-of-hours service in 2011, enabling it to replace skilled clinicians with call-handlers without medical training who follow a computer-generated script to assess patients. The move triggered a fourfold increase in ambulance call-outs.
One of the first widely reported major incidents that led to Serco coming under scrutiny was in June 2011 when a six year old boy died as a result of a burst appendix which was not accurately diagnosed. The father of the boy was asked to examine his son in the hospital car park by Serco’s call handlers and advised to visit the GP the next day. An inquest heard that the triage nurse did not ask enough questions and was subsequently put on six months close supervision.
Whistleblowers then reported on the frequent under-staffing of the service, alleging that more than once there had only been one GP available to cover the whole county from midnight until 8am. Investigations by the CGC eventually led to a highly critical report in July 2012. The report highlighted that the service had a shortage of "qualified, skilled and experienced staff to meet people's needs". Serco was also found to have falsified records to make the service appear faster and more efficient than it actually was.
The CQC’s damming report also noted that a quarter of staff had not completed mandatory training. Although Serco said all its GPs received formal clinical supervision, not all staff had received regular appraisals. Inspectors noted that "the provider did not have an effective system to assess and monitor the quality of service that people receive". The report was highly critical of the number of staff on duty, stating that "there was a shortage of clinical staff at times". The CQC inspectors found that on one particular weekend, some doctors were working double shifts which consisted of 13-hours through the night, and others were working 11-hour daytime shifts.
Although regulators reported that Serco’s service had improved following the CQC report, it did not improve sufficiently for one young boy. William Mead died of sepsis in September 2014 within 12 hours of the call to Serco’s 111 helpline. A report published in January 2016 found that there were four missed opportunities to save William’s life, including a call to the 111 helpline hours before his death and visits to out-of-hours GPs. The report said the “tickbox” system used by call handlers failed to include “sepsis red flags” despite the fact that it is one of commonest causes of death among children.
By 2013 Serco was seeking to get out of the contract in Cornwall. The company first tried to unsuccessfully sub-contract the work to Devon Doctors, the GP consortium that had failed to win the original bid. Then in December 2013 Serco announced that its contract to provide out-of-hours care in Cornwall would end 18 months early in May 2015. In June 2015 two GP provider companies, Cornwall Health and Kernow Health, took over the service. GP-led social enterprise Devon Doctors, which already runs the Devon out-of-hours services, is behind Cornwall Health, while Kernow Health is run by Cornish GPs as a community interest company.
Suffolk Community Care
In March 2012 Serco was awarded a three-year £140 million contract to provide community health services for NHS Suffolk. Serco was to provide community and specialist nursing, the management and operation of community hospitals, speech and language therapy, specialist children’s services and equipment services. After winning this contact, Serco announced it was to cut 137 health jobs. At the time, Unison said it was "deeply worried" about the affect the staff cuts would have on the level of care. Tim Roberts, from Unison, said: "We warned at the time that the only way they would be able to deliver the contract would be by making drastic cuts and that's exactly what they are now proposing.”
In January 2014, Suffolk County Council issued a report criticizing Serco’s service in the county; Serco was found not to be hitting three of their key performance indicators (KPI) in community health response times. By August 2014 Serco had determined that clinical care services was not a profitable business area and made the decision to withdraw from this market. Serco eventually handed over the community care contract in Suffolk to new providers in September 2015. A Serco spokesperson noted that the £140 million the company was paid for the contract was "not adequate" for the work required.
This contract for Braintree Hospital began in 2011. By 2013 Serco had realized that it was not going to make a profit on the contract and was trying to leave. The company reported that the hospital contract had an operating loss of £2 million in 2013 and as there was little scope for increasing the profitability of the hospital, the company was no longer interested in the contract. Serco terminated the contract a year early in January 2014.
In 2009 Serco formed GSTS Pathology a joint venture with Guy's and St Thomas' NHS Foundation Trust providing pathology services. The 50:50 joint venture was under a ten-year contract valued at around £250 million to Serco. King's College Hospital Foundation Trust joined the venture in 2010. The company is now known as Viapath.
In August 2014 an investigation by The Independent and Corporate Watch found that Viapath had overcharged NHS hospitals by millions of pounds for the pathology service. Leaked documents indicated that three of its fifteen laboratories had overcharged by £283,561 in a three-month period, with its invoicing and billing systems deemed to be “unreliable” and containing “material inaccuracies”. It was that the overcharging could have amounted to £1m in 2012 alone. The service has also been criticised for cost cutting by not adequately replacing staff and introducing pay cuts, which have affected the quality of the laboratories’ output.
Outside the NHS
Prisons and Detention Centres
In the UK, Serco had a major contract with the UK government for the electronic tagging of prisoners. However, following an audit of the contract, Serco was found to have charged for tagging of prisoners who did not exist, were dead or were still in jail. Serco was the subject of a criminal investigation by the Serious Fraud Office, which led to the cancellation of the privatisation of three prisons in Yorkshire, for which Serco was the lead bidder. Serco has subsequently paid back £68.5m to the government after it became known that it had overcharged on its contract for the remote tagging of offenders, with the scale of its overcharging being revealed as three times greater than it was initially estimated. Serco were fined £19.2 million and ordered to fork out £3.7 million in costs after they understated profits made from electronic monitoring contracts when they reported them to the Ministry of Justice.
The company was also criticised, following the death of Rafal Sochacki at Westminister magistrates' court on 21 June 2017 (one of the hottest days for four decades). The man suffered a heart attack after he was held in a Serco custody van for 50 minutes with the engine turned off and inside a court cell where the air conditioning was broken meaning his cell was estimated to have reached 34-40 degrees. He was said to have experienced "excessive temperatures" both in the Serco van and the cell.
In 2014, Serco was being investigated by MPs after a secret internal report into alleged sexual abuse by a member of staff against a detainee at the Serco operated Yarl's Wood detention centre came to light following a four-month legal battle for its publication between the company and The Guardian, which ended with the high court ruling for its disclosure. There is concern over the way that Serco handled the investigation into the allegations including the way it dealt with evidence from another member of staff and the assertions by management about the credibility of the alleged victim. In 2015, a dossier of a decade of complaints about sexual abuse and mistreatment at Yarl’s Wood was handed to MPs.
The decision to award Serco a further eight year, £70m contract to run the Yarl’s Wood women’s detention centre has been heavily criticised by human rights groups, in light of the allegations of mistreatment by staff at the centre. It was awarded a new contract despite the fact that it is the subject of an investigation by the home affairs select committee into its running of Yarl’s Wood.
In light of these concerns, and others, relating to criminal justice contracts, The Howard League for Penal Reform has called on Serco to be barred from applying for new contracts until investigations into the controversies surrounding company have been completed.
Despite these concerns, the home office awarded Serco another contract worth £200 million in early 2020 to run two more immigration removal centre, Brook House and Tinsley House near Gatwick airport from May 2020 for eight years.
There was further controversy for Serco in February 2020, when a Nigerian woman told a court hearing that she was thrown to the floor “like a bag of cement” in an incident involving 11 Serco guards at Yarl's wood.
Serco was also severely criticised for its mass eviction of asylum seekers in Glasgow 2019, although the courts ultimately deemed the move was lawful.
Serco has come under fire in Australia with regard to its business in prisons and detention centres. Serco staff have been criticised for their actions over the death of refugees following the sinking of a refugee boat off Christmas Island in 2010. There have also been inquests into suicides and beatings of detainees at other detention centres in Australia run by Serco.