Serco’s decision to pay an annual dividend has been criticised by Sir Keir Starmer after the company’s revenues were boosted by £350m from Test and Trace.

The Labour leader said it was “outrageous” that the outsourcing giant was resuming pay-outs to shareholders after its results showed income lifted by the much-criticised programme.

Serco’s annual profits rose 89% to £153m as revenues climbed by £636m, or 20%, to £2.88bn.

Chief executive Rupert Soames said it was the right time to resume pay-outs to investors – at 1.4p a share or around £17m overall – after it shored up its financial position and repaid government COVID support. Shares rose 4%.

Mr Soames also played down the impact of the pandemic in lifting profits and revealed that the company was paying £5m extra to 50,000 frontline staff to recognise the “intense pressure” they had faced during the pandemic.

But Labour leader Sir Keir said in a tweet: “Taxpayers’ money shouldn’t be given to Serco’s shareholders via dividends.

“The government should have placed Test and Trace in the hands of our NHS and local communities.”

Serco, which earned 43% of its revenue in the UK last year, took a key role in the government programme as part of the battle against the virus.

It has operated more than a quarter of the testing sites and half the Tier 3 tracing capacity.

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Serco said these contracts, though operated at lower than usual profit margins, delivered nearly £350m of revenues.

That helped it outweigh losses from other parts of the group negatively affected by the pandemic and meant the net impact to profits from the virus was a £2m boost.

Mr Soames said it was “pleasing finally to be able to re-start paying dividends” after the pay-outs had been cancelled in 2014 as the company sought to restore its fortunes and repair its reputation following an electronic tagging scandal.

Last week the Serco boss told Sky News that the Test and Trace programme was “now working really, really well” but admitted it has taken “some time to settle down”.

He added: “The idea that COVID has been a huge boon to our profits is simply not true.”

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