Capita plans expansion into the National Health Service

Capita, the company which collects the TV licence fee and will run the London congestion charging scheme, yesterday signalled its plans to expand into the National Health Service.

Rod Aldridge, Capita's chairman, said it has applied to join a list of government-approved companies to whom the NHS could outsource management or administrative services.

The company yesterday upped its estimate of the potential size of the outsourcing market by £15bn to £65bn per annum to take account of new opportunities it sees in health, transport and the administration of life insurance and pensions.

Mr Aldridge said: "There are emerging opportunities for the group in the health service where the Department of Health is currently preparing a register of those interested in raising performance in the NHS."

He said Capita was likely to be interested in taking on some of the administrative work and perhaps some of the call centre functions of NHS Direct, the health helpline. The value of work that may come available is estimated at £4bn.

The group reckoned there will also be a £6bn market for private sector companies to collect road tolls, operate speed cameras and run congestion charging schemes. Mr Aldridge said the experience gained from planning London's congestion charging project could be used to bid for similar work from 36 other local authorities said to be considering a similar scheme.

Capita said yesterday it has won £1.1bn of new contracts since the start of the year, compared with £744m in the whole of 2001. It posted a pre-tax profit of £29m for the six months to 30 June, up 38 per cent.

Its shares fell 2p to 260p despite the wider market rally. The stock, like many in the highly valued support services sector, has suffered a significant derating in recent months and has halved since the start of the year.

Capita insisted that accounting worries at other companies in the sector should not apply to it. The group has no special purpose financing vehicles, no associated companies and no long-term PFI contracts, Mr Aldridge said.

He also defended Capita's running of the new Criminal Records Bureau, which opened in March but was overwhelmed by demand and has attracted the criticism of government ministers. The bureau issues certificates to those working with children or the elderly.