Transport for London (TfL) has handed the contract to run the capital’s congestion charge to IBM, pushing out Capita, the outsourcing company that has operated the scheme since its inception in 2003.

From November 2009 IBM will be responsible for the operation of the congestion charging and low emission zone schemes, including the technology underpinning the payments. The 400 staff at Capita are likely to keep their jobs but be employed by IBM.

Graeme Craig, interim director of congestion charging at TfL, said that IBM’s submission was selected as the “most economically advantageous” following a year-long tendering process. No figures were disclosed.

Capita is thought to have run the scheme competently. It was so keen to win the inaugural contract that it agreed to invest £50 million to help cover costs for building the IT systems and related infrastructure. It has recouped this money.

The congestion charge, which was expanded to West London, began on February 17 2003. TfL claims to have reduced traffic by 21 per cent within the zone, as well as cutting emissions and bus delays.

The money raised from charging — about £123 million annually — must be used to fund transport improvements. However, controversy still remains over the impact on businesses of the £8 daily charge, which was increased by £3 a day in July 2005.

Robert Plant, an analyst at Cazenove, said: “IBM has stated its intention to target congestion charging internationally and we believe that it bid keenly. Capita has done a very good job on congestion charging, but it may be that, now it is in more of a steady state, TfL was more focused on price.”

Three bidders were selected to submit final offers for the contract. They were Capita Group, IBM United Kingdom and the Thales Alliance, comprising Thales Information Systems, Accenture and Vertex Data Science.

Transport for London is in talks with Metronet’s administrators to buy what remains of the failed Tube refurbishment company, which is responsible for upgrading two thirds of London Underground lines.

Ernst & Young, administrator to Metronet, confirmed yesterday that it had received a formal bid from TfL and that it would consider the offer for a week or so, to the exclusion of other private sector bidders.

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