Thursday, 23 January 2014

London congestion charging contract changes hands again

Computerworld UK reports that Capita plc has won the contract to manage London's congestion charging system which it lost in 2009 to IBM.  Capita was originally responsible for the introduction of the charge in 2003 and was subject to accusations that it charged "over the odds" for the management of the congestion charge, because of the risks involved and the political imperative for then London Mayor Ken Livingstone to introduce the charge in 2003.  

Capita will take over the full contract in November 2015 for five years with a possible further extension of another five years.  The report notes that the original contract was worth around £60 (US$99) million per annum in revenues to the company, with the current contract closer to half that value.

Capita says the contract is worth about £145 million (US$241 million) in revenue in total, assuming that is for five years it suggests around £29 million (US$48 million) per annum.

The contract also includes the London Low Emission Zone and TfL's traffic enforcement notice processing system.

Of course there should be considerable economies over time with the contract, as the customer base is largely stable, and there are unlikely to be any significant changes over the next five years given the political appetite to expand the charge is next to zero, as is the political appetite to make it more disaggregated.

Any more interesting future for the London congestion charge will need to either await a profound change in the political environment or someone willing to offset new charges with reductions in other taxes (a suggestion some years ago was that a London wide charge could replace Council Tax (a flat tax on individuals based upon the historic value of the property they live in).

However, the wide-eyed views expressed by the Mayor and some others, that London could cover some major highways to put parks and buildings on top of them, would take a lot of money too.  Charging some London motorists to pay for better roads, both in capacity, performance and local impact, might get some traction, but for now London doesn't even have a highway network strategy - and anyone who uses the network regularly should expect that this ought to be a priority.

Capita's press release here.

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