Capita wins £230m contract to provide Livingstone's congestion charging scheme

The support services firm Capita yesterday became the "preferred bidder" to administer the proposed controversial traffic congestion scheme in London.

Should the plan go ahead, Capita reckons the deal with Transport for London would be worth £230m over the first five years although the contract could be extended by two years.

The plan, which would force motorists to pay £5 to enter the capital's city centre during peak hours, is subject to public consultation until 18 January.

The Mayor of London, Ken Livingstone, is expected to make a decision in February on whether to forge ahead with the scheme, modify it or hold a public inquiry. Ministers, however, have threatened to block it altogether.

"There are various political hurdles to get through on this. We're not there yet. This isn't a straight forward contract without political considerations," said Robert Morton, an analyst at WestLB Panmure.

Under the terms of the contract, Capita would have to deliver and manage the scheme's customer services network to enable motorists to pay for access to the city centre over the telephone, internet or in shops or kiosks.

The company is understood to have been chosen to handle the scheme's customer services instead of rival support services business Serco.

Transport for London retains an option to enter into a formal contract with Capita until 15 March and the earliest date for the scheme to 'go live' is predicted to be February 2003.

"It doesn't get implemented until February 2003 so in terms of any benefit [to Capita] it is still a long way off. But obviously it is a big contract," Mr Morton said.

News of the potential new contract comes only a week after Capita announced it was the preferred supplier to deliver the BBC's TV licensing service. That contract, its biggest ever and won from Consignia, would be worth £500m over 10 years.

At the start of the week, Capita also said it had bought the Industrial Society's workforce training and development business for a maximum of £23.75m, of which £23m was to be paid for in cash.

That acquisition, expected to be earnings enhancing in 2002, recorded a £3m profit on sales of £14m in the year ended June.

Both the BBC contract and that acquisition forced analysts to upgrade their 2002 forecasts by £4m to £5m to about the £90m level.