Boris Johnson’s Test and Trace operation faced fresh criticism after a new report found that its privately hired call centre staff worked just 1% of the time they were paid.

The interim study by the National Audit Office (NAO) said the controversial £22bn service risks being a waste of taxpayers’ money while failing to plug big weaknesses in the fight against coronavirus.

The financial watchdog said that the system headed by Tory peer Dido Harding had to date failed its key objectives on test turnaround times and tracing people at risk of spreading the virus.

Labour and Tory politicians joined forces to demand improvements after the NAO report found Test and Trace had also failed to anticipate the September “surge” in demand caused by reopened schools.

It had also spent huge sums on the private sector, with billions going on contracts awarded without any competition.

Crucially, the report found that ministers spent £720 million on contracts to hire 3,000 health professionals and 18,000 call handlers, but they ended up with “little work to do” as the pandemic declined in the summer.

Just 4% of health staff worked for their paid hours, and just 1% of call centre staff did so.

“DHSC had no flexibility to reduce the number of call handlers under the original contracts, which ran for three months,” it said.

“It negotiated new terms in August and reduced the number of these staff to 12,000, but utilisation rates remained well below a target of 50% throughout September and for much of October.

“This means substantial public resources have been spent on staff who provided minimal services in return.”

NAO chief Gareth Davies said: “The government has rapidly increased testing and tracing activity, building significant new infrastructure and capacity from scratch.

“However, it has struggled to test and trace as many people as it has capacity to, or to reach the contacts of people testing positive quickly enough.

“Test and Trace is core to the UK’s pandemic response. It must improve its performance with a focus on effective engagement with the public and integration with local efforts to improve tracing.”

The NAO found that contracts worth £7 billion have been signed with 217 public and private organisations to provide supplies, services and infrastructure, including test laboratories and call handlers for tracing.

It stated: “In total, 70% of early contracts by value were directly awarded without competition under emergency measures that were in use across government.

“A range of stakeholders have queried why the Government did not involve local authorities more in its initial approach to tracing, given their previous experience in this area.”

The NAO report said 24-hour result targets had not been met, despite promises by the PM to get 100% done to that standard by the end of June.

Targets to hit 80% of close contacts of people with Covid were regularly missed too, even though that was the level scientists felt was needed to make the whole service viable.

The study was written before the past fortnight, when changes to the way Test and Trace phones households has led to a big improvement in contact tracing rates.

In a further criticism, the NAO said the service did not plan for the sharp rise in testing demand in September when schools and universities reopened.

As a result, laboratories processing community swab tests were unable to keep pace with the volume and experienced large backlogs, which meant NHST&T had to limit the number of tests available.

“National and local government have tried to increase public engagement with tracing, but surveys suggest that the proportion of contacts fully complying with requests to self-isolate might range from 10% to 59%.”

Shadow health secretary Jonathan Ashworth said: “The £22 billion Test and Trace now has a budget larger than policing and fire service combined, but it has failed to trace sufficient numbers of contacts and ensure those who are contacted are able to isolate.

“Instead of handing multi-million pound contracts to big private outsourcing firms the government should have invested in local, experienced public health expertise.”

Commons Public Accounts Committee chair Meg Hillier said the government had “tried to reinvent the wheel” by centralising Test and Trace, leaving local public health teams “out in the cold”.

“Speed is of the essence but only two fifths of tests were turned around within 24 hours. And Test and Trace has only contacted two thirds of the people it knows were in close contact with someone who tested positive.

“The government needs to urgently work out what’s going wrong at every step of the process. Throwing more money at the problem clearly isn’t the answer.

“Testing capacity has risen and it’s easier to get a test locally but Test and Trace’s performance still isn’t good enough.”

Ian Hudspeth, the Tory chairman of the Local Government Association’s community wellbeing board, said ministers now needed to do more to work with councils to fix the system.

“From the beginning of the COVID-19 pandemic and subsequent launch of NHS Test and Trace, we have consistently called for councils and their directors of public health to be able to use their considerable expertise and unparalleled experience to play their full part in the national effort to beat this virus,” he said.

“Environmental health, emergency planners, trading standards and public health teams are among the council services which already had prior understanding about how to handle such outbreaks. What they needed from the outset from the national system was the necessary capacity, resources and precise data on who to reach, to help stop the spread of coronavirus.”

Billy Palmer of the Nuffield Trust think tank added: “We desperately need a fully functioning test and trace system – we know that worse performance seems at least to be associated with areas where there are higher cases. This report strengthens the case that we must start by taking a hard look at performance and cost-effectiveness before any third wave hits.”

Dr Jennifer Dixon, chief executive of the Health Foundation pressure group, said the findings underlined why the government should start putting more money into local services, pointing out that the public health grant in 2020/21 was 22% lower per capita than it was five years ago.

“This is particularly concerning at a time when other parts of the health and care system – including public health and social care – are chronically underfunded. “

A spokesperson for the department of health and social care said: “As the NAO’s interim report notes, because the Government rapidly scaled up the UK’s coronavirus testing capacity and launched NHS Test and Trace, millions of people have discovered whether they have COVID-19 and whether they should self-isolate.

“We know there is more to do, and yesterday we published the NHS Business Plan, setting out the next phase of improvement for the service, and how we will increase the speed and reach of testing and tracing even further. ”