THE £8 flat rate congestion charge in Central London is to be abolished and replaced by a system of “intelligent tolls” that vary according to the time drivers travel into the zone and the emissions of their vehicles.

Transport for London (TfL) is working on an advanced charging system that it believes will become a template for congested cities across Britain.

People who drive regularly into the zone will have electronic tags fitted on their dashboards that will be read by beacons attached to roadside gantries.

Drivers will no longer have to remember to pay because the charges will be deducted automatically from their pre-paid accounts.

Those making only brief trips into the zone outside the morning and evening peak, such as to go shopping, will pay much less than those who commute by car during the busiest periods.

Night shift workers who leave the zone in the morning, against the flow of traffic, will pay the lowest rate or may be exempt. Drivers of gas-guzzling vehicles, such as large 4x4s, will pay two or three times more than owners of smaller cars.

The rates have yet to be agreed, but Ken Livingstone, the Mayor of London, has said that he favours a top rate of at least £20. He said: “I think we have reached a tipping point with public reaction to climate change. I think we have to make significant changes in the way we live our lives. We’re already working on whether we can bring in a more sophisticated congestion charge.

“Therefore, I would very much favour the idea perhaps of the £20 charge for cars that emitted two or three times the normal level of carbon emissions.”

TfL plans to make the changes from 2009, when it will relet the contract to manage the congestion charge scheme. The new contract will also allow for the possibility of moving to a satellite-based charging system covering the whole of Greater London by 2015. Cars would be fitted with satellite tracking devices and be charged for each mile they travelled, with the tolls varying from 15p to 60p a kilometre according to the level of congestion.

Michelle Dix, TfL’s congestion charging director, said that the tag and beacon technology would be ready for 2009 but the satellite system required further development.

She said that drivers would not be obliged to install either tags or satellite tracking devices, but there will be a strong incentive to have a tag to avoid having to give details of each journey.

She said: “People may not want on-board units tracking them everywhere. We won’t make it mandatory.”

She added that the new contract would be more flexible than the present one held by Capita. This would allow the charging system to be changed far more swiftly to suit changing needs.

Ms Dix said that 83 per cent of drivers who had registered their cars with TfL had incurred £100 penalties after forgetting to pay. More than 4,500 drivers are fined each day.

Local authorities in seven areas are studying the feasibility of introducing their own congestion charge schemes, including the possible use of tag and beacon technology. The seven areas are Bristol and Bath, Cambridgeshire, Durham, Greater Manchester, Shrewsbury, Tyne and Wear and the West Midlands.

A FAIR PRICE - IF ROAD TAXES FALL

More than two thirds of motorists would accept nationwide congestion charging if it was accompanied by a permanent reduction in road tax or fuel duty, according to a survey of 1,000 drivers commissioned by the RAC: