Where congestion cash goes

Where congestion cash goes

The £5 charge must be paid on the day

London's congestion charge aims to raise £130m in revenue a year. But how much of the motorist's £5 daily charge will go on running the scheme and how much on improving transport in the capital?

An advert claiming all proceeds from the £5 congestion charge will go back into improving transport in the capital has been dubbed "misleading".

Transport for London, the charge's operator, has been told by the Advertising Standards Authority to make it clear in future adverts that only money "raised" above and beyond administration costs will be spent on improvements.

The world's biggest traffic congestion charge scheme cost £200m to set up paid for by a Central Government grant, according to TfL.

A total of £12.7m was spent on advertising prior to Monday's launch to alert the public that the scheme to alleviate traffic gridlock was about to begin.

In its first year the congestion charge will raise about £214.5m in sales and penalty fees.

Of this, £93.4m will go on administration, including paying Capita to collect the fees.

That will leave about £121.1m to plough back into transport between 2003-2004.

Falling costs

But it is expected the scheme will raise on average £130m a year including £100m from charges and £30m from penalty fees.

For those motorists who fail to pay on the day they drive into central London penalty fees can go as high as £120.

"Administration fees are expected to fall each year as there is a reduction in enforcement costs," a TfL press officer told BBC News Online.

Any revenue left after administration costs must be ploughed back into transport by law.

Not all the cash will go into public transport but the bulk - at £84m - will be spent on buses.

Five-year contract

The rest will be divided between £36m on safe routes to school for children, £6m on CCTV and £4m on road safety measures and improving bus stops.

Capita, which has call centres in Coventry and Glasgow, said its five-year contract to collect the fees was worth a total of £230m.

A total of 900 staff are working in the two call centres dealing with payments.

But a spokesman said its figures for profit levels were commercially sensitive.

Stephen Glaister, professor of transport and infrastructure at Imperial College, London and on the board of TfL, said there had been a competitive bid to run the scheme and the administration costs reflected what the scheme cost.

"The revenue forecast is as solidly based as we can make it.

"The first few days of the scheme is not inconsistent with the £130m forecast," he told BBC News Online.