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A report produced by the budget committee of the London Assembly disputed the London mayor Ken Livingstone's claim that the Transport for London (TfL) contract with Capita represented "best value" for Londoners.

It also said the contract had not proved a good deal for taxpayers.

The report showed that Capita had forfeited �1m to TfL up to the end of September because of "problems with customer service".

The report, which scrutinised Capita's contract with London mayor Ken Livingstone's TfL, said: "We dispute the mayor's frequently made claim that TfL's contract with Capita represents 'best value' for Londoners."

It also said that TfL had problems gauging how well Capita was doing because of a lack of performance indicators written into the initial contract.

This was one of the reasons the contract was renegotiated after just six months into the road toll scheme.

We have an absurd situation whereby Capita pay a �1m fine and are given an extra �31m by Ken Livingstone Eric Ollerenshaw, London Assembly Conservative group leader

In the new deal, Capita was given an extra �31m to improve the way the scheme worked, according to TfL.

But the committee's report said: "Our view is that the problems which led to the contract almost being terminated were in part due to deficiencies in the initial contract.

"This is especially remarkable given the �30m allocated by TfL in management and support start-up costs to avoid such problems occurring."

Eric Ollerenshaw, the Conservative group leader of the London Assembly, said: "We have an absurd situation whereby Capita pay a �1m fine and are given an extra �31m by Ken Livingstone."

Success or failings

But a spokesman for TfL said the fine was not to do with customer service failings.

"Capita forfeited �1m because we had problems with its management information systems," he said.

"This meant we could not determine Capita's success or failings.

"It was also a reason for the contract being renegotiated and the �1m forfeited relates to problems that pre-date the new contract."