What’s going on?
Transport for London (TfL) has bailed out Capita, the firm that operates its congestion charge, with £31 million of taxpayers’ money. This comes despite evidence that Capita is partly to blame for losses on the scheme. It follows an audit from accountants Deloitte & Touche which said that Capita would not make money from the £280 million contract because fewer than expected motorists were paying the charge. Yet only last week, Rod Aldridge, Capita’s executive chairman, said it would make £6 million a year profit from the contract. Steve Norris, the Conservative candidate for the London mayoralty, called the bail-out “grotesque”.
Didn’t Ken Livingstone say the congestion charge was a success?
In a way, it’s been too successful. There are 38 per cent fewer cars coming into the zone, and vehicles within the zone are down 16 per cent, compared with the 10-15 per cent predicted. But this means that revenue has fallen from an estimated £200 million to £65 million, and three public transport projects have been postponed. In addition, TfL has admitted up to one in four charge-dodgers gets away with not paying because the system cannot cope — a major problem when credibility depends on effective enforcement.
Advertisement
What is Capita anyway?
An outsourcing company that, among other things, collects your television licence and pays teachers’ pensions. Run by Aldridge, a 56-year-old accountant who failed his 11-plus and left school at 16, it has grown from an obscure IT contractor into a £1.7 billion giant. Last week it announced a 27 per cent rise in first-half profits to £51 million, and if other cities follow London, believes the UK congestion charge market could be worth up to £1 billion a year.
Hasn’t it been in hot water before?
It has a £400 million contract to run the Criminal Records Bureau but last year was fined £1.8 million for failing to vet teachers in time for the new school year. Its accident-prone congestion charge system failed to process 1,600 penalty notices last month, has fined 350 motorists twice and has had problems with numberplate recognition. Once a stock market darling, it fell out of the FTSE 100 in June, and Norfolk County Council recently pulled out of a £50 million contract that had six years left to run.
What happens now?
Advertisement
There are calls for greater scrutiny into Capita’s need for additional public money but TfL says the cash is dependent on Capita making major changes. No improvements, no money.