SERCO’S payment of dividends to shareholders was branded an “outrage” today after the firm reported bumper profits partly derived from its taxpayer-funded Covid test-and-trace scheme.

Dividends totalling £17 million will go to shareholders in the private outsourcing giant in its first such payouts for seven years.

Serco chief executive Rupert Soames said that gains from coronavirus-related contracts amounted to just 1 per cent of the company’s profits, but he admitted that they added £350m in revenue.

The test-and-trace system run by Serco and fellow outsourcing firm Sitel was found to have performed poorly by comparison to schemes run by local NHS public health teams.

Serco’s annual report asserted that “much of the criticism” about the system “was wildly unfair and bore little relationship to the facts.”

Mr Soames – brother of Tory grandee Sir Nicholas Soames and a grandson of Winston Churchill – hailed the system as a “remarkable success,” claiming that the number of people being tested each week equals the number being vaccinated.

But the NHS-run vaccination scheme began operating three months ago, while the test-and-trace scheme has been in place for almost a year.

Shadow Cabinet Office minister Rachel Reeves described Serco’s shareholder payout as an “outrage” that is “typical of this government’s appalling waste during this pandemic.”

She said: “They should have done with contract tracing as they rightly did with the vaccine – place it in the hands of our NHS and our local communities, instead of using it to hand huge profits to Serco.

“This is the company who said in a leaked letter that Covid was an opportunity for them to cement themselves into our public service delivery.

“If the government doesn’t want to keep seeing a repeat of this troubling pattern, they must drastically reform public service procurement. A Labour government will.”

We Own It campaigns officer Pascale Robinson said that “people will be rightly outraged” by the dividend payout.

She suggested that Serco should “do the right thing” by recognising its “total failure” and giving back “the money that it has taken in coronavirus contracts.”