CONGESTION charging will strike a fatal blow to the car rental business in central London because of increased costs and a maze of administration, a senior director at Britain's largest car hire firm has warned.

Brian Jayes, operations director for National Car Rental, claims the charging scheme will kill demand for hire cars from London residents.

Transport for London (TfL) is offering discounts of up to 90% from the £5 per day congestion charge that comes into force in February 2003 for residents whose main home is in the congestion charging zone, but the discounts are only available under certain conditions that effectively preclude short term hire cars.

Residents can register one private vehicle for a 90% discount from the charge, but this must be for a minimum period of at least one week (so drivers pay £2.50 instead of £25, for example). However, residents must also pay an annual £10 fee to register their cars with the TfL database.

This means that a resident wanting to take advantage of a hire car for three or four week days cannot take advantage of the discounted charges. And even if they plan to hire a car for longer, they will have to pay the £10 fee to register it on the database to qualify for the discount.

'The new rules do nothing to encourage people to rent rather than buy. If rental locations close, jobs will be lost and residents will be forced to consider buying a vehicle because they will no longer be able to rent,' said Jayes.

He added that confusion among hirers over the question of whether fees to enter the charging zone have been paid will also put off customers outside London who had previously been attracted to the hassle-free benefits of renting cars.

As a result, Jayes believes congestion charging will reverse the trend of Londoners to hire cars as and when they require them, and instead increase car ownership, achieving completely the opposite result to its ambition.

'Given these factors it is hard to see how this could be regarded as a green initiative. We sincerely hope that exemption on car rental will be considered before the scheme is introduced next year,' he said.

The British Vehicle Rental and Leasing Association is equally vehement about the disastrous impact congestion charging will have on the inner city hire firms. Director general John Lewis, warned of a rental 'desert' in central London, and criticised the 'appalling complexities' of the scheme.

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