Congestion charge firm may lose fines role

The much-criticised company running London's congestion charge came under renewed pressure to perform yesterday when transport chiefs began the search for a replacement.

The much-criticised company running London's congestion charge came under renewed pressure to perform yesterday when transport chiefs began the search for a replacement.

Transport for London (TfL) is warning Capita that part of its contract will be handed to another company unless targets for improvement are met.

While TfL was at pains to reassure Capita about its present performance yesterday, there have been deep misgivings about Capita's competence since the £5 levy was introduced on 17 February. The company was failing to catch drivers who evaded the charge and was fining people who had not driven through the congestion zone in central London. People also found it difficult to get through to call centres.

Senior officials at TfL issued a legal document setting out the functions of a replacement contractor which would collect fines from motorists.

The advertisement, sent out under European legislation on competition, also says that any new contractor could be asked to run the operation in new congestion charge areas. TfL is consulting on a westward extension of the present zone.

Capita issues between 160,000 and 250,000 penalty charge notices a month. Between 10 per cent and 15 per cent are queried by the motorist, but only between one and two per cent of the penalties go through the appeals process.

In October, Capita was fined £1m for its poor performance in delivering equipment and dealing with drivers. The mayor, Ken Livingstone, came close to sacking Capita, describing the company's customer relations as "completely unacceptable". Since then a new contracting regime has been imposed involving penalties for incompetence. As part of the new regime, Mr Livingstone gave Capita an extra £31m to help it iron out problems in the management of the charge.

The controversial decision followed an audit by the accountants Deloitte & Touche which concluded that Capita could not make money from the £280m contract because fewer motorists than expected were paying the charge.

Some £3.5m of the extra taxpayers' money received by Capita was spent on improving computer systems which critics believed should have been paid for by the company.

Capita has come under fire elsewhere for mishandling other public service contracts including at the Criminal Records Bureau.

A spokesman for TfL said it was "good and prudent management'' to ensure that there was a contingency plan to enforce the charge. But there was no intention to end Capita's contract because its "current and emerging'' performance was meeting expectations.

Capita said TfL was responding to political pressure from the Greater London Assembly. But it said it was normal procedure for the organisation to put in place contingency arrangements for other contracts. The mayor had recently praised the company for its "dramatically'' improved performance.

The assembly's budget committee has criticised Mr Livingstone for handing over the extra £31m to Capita.