Yorkshire Covid test firm lays off 60 staff after Government fails to pay for tests

Covid-19 test maker, Abingdon Health, said it has had to cull 60 jobs over the past four months after the Government failed to pay it for the tests it has provided.

Abingdon technicians working on the rapid test foiling machine

The York-based firm said: “The lack of payment has already had significant implications for Abingdon, a Northern Powerhouse company, and its employees and, due to the need to contain costs and manage cash, the company’s workforce has reduced from 190 to 130 employees over the past four months with a number of valued employees having to be made redundant.

“The pressure on cash flow will increase the longer that payment by the Department of Health and Social Care (DHSC) is outstanding.

Sign up to our Business newsletter

Sign up to our Business newsletter

“As a small UK company that stepped up to support the UK Government when asked and a company that has no political affiliations at all it feels that the only people directly affected by the judicial review process are Abingdon’s employees, investors and other stakeholders.”

By the end of June, Abingdon said it was owed a total of £6.7m plus interest from the DHSC for components that Abingdon has procured on the DHSC’s behalf (£1.5m) and for AbC-19TM kits (£5.2m including VAT) the company has delivered to the DHSC in the period from November 2020 through to January 2021.

Abingdon said: “Despite having been informed by the DHSC in January 2021, verbally and in writing, that payment for the 1 million tests had been cleared, the company understands that the DHSC has now chosen not to pay any of these outstanding sums until after the completion of the Judicial Review proceedings initiated by the Good Law Project.

“The DHSC has also stated that, if Abingdon commences legal proceedings to recover the outstanding sums, it will apply to have those proceedings stayed until after the determination of the Judicial Review.

“The DHSC seeks to avoid its contractual obligations despite having accepted delivery of the products the company has supplied, and which it is using, and for components purchased on behalf of the DHSC at its request. Abingdon therefore continues to pursue the DHSC for payment.”

A DHSC spokesperson said: “We do not comment on details relating to ongoing legal proceedings, but we have been always been clear Government contracts must deliver value for taxpayer money and we will take action in instances where this does not happen.”

The Government has previously said that as part of an unprecedented response to this global pandemic, it has drawn on the expertise and resources of a number of public and private sector partners.

It said it has been clear from the outset public authorities must achieve value for taxpayers and use good commercial judgement. It added that due diligence is carried out for all Government contracts and it takes these checks extremely seriously.

Abingdon said that recent data on its AbC-19TM test showed its ability to work with Covid-19 variants as well as underlining its strong performance in monitoring vaccine response. Based on this evidence, the firm said the potential for AbC-19TM continues to grow.

In a trading update for the year to June 30, the group said it generated revenues of £11.6m and an adjusted EBITDA loss of £3.3m.