ALL cabs will be exempt from Greater Manchester's planned congestion charge, it emerged today.

Controversial proposals drawn up by the region's transport chiefs would have seen pre-booked private-hire vehicles paying the peak-hour charge of up to £10 a day, while `flag down' black taxis did not.

Now they have had a change of heart - and decided private-hire taxis should be exempt, too. The u-turn was hailed by cabbies last night as `a victory for common sense'.

It emerged as the Association of Greater Manchester Authorities (AGMA), a coalition of the region's 10 councils, began 14 weeks of public consultation to decide whether to introduce the peak-hour congestion charge of up to £10 a day in return for £2.7bn of public transport improvements.

Brochures detailing the proposals have been sent out to all 1.2m homes in Greater Manchester.

AGMA are due to take a decision in October - although Sir Richard Leese, leader of Manchester council, is spearheading a move to give the people the final say in a binding region-wide referendum.

Eligible

A consultation document released by AGMA yesterday confirmed private-hire drivers would now be included in a list of those eligible for a 100 per cent discount should the charge to be introduced. Black cabs, emergency vehicles, motorcyclists and disabled drivers were already on the list.

The document said: "While there are legal differences between hackney carriages [black cabs] and private-hire vehicles, the consensus is that the latter also perform a valuable public service.

"It is therefore proposed that [a] 100 per cent discount should be provided for licensed hackney carriages and private hire vehicles that are registered with a Greater Manchester authority."

Paul Meek, of the Manchester Private Hire Owners and Drivers Association, said: "This is a victory for common sense.

"The U-turn has come about because it's finally been realised that we are an essential part of the public transport system."

Private-hire drivers had warned they would be forced to pass on the costs of the congestion charge - up to £10 a day - to their customers.

They had also threatened to take legal action against AGMA for what they claimed was discrimination.

Grant

The £2.7bn on offer to Greater Manchester in return for the charge is made up of £1.5bn in government grant and £1.2bn of loan.

It emerged last night that the loan would be paid back over 20 years from 2021 at an estimated rate of £56m a year.

The charge is expected to generate £174m a year and cost £31m to run.

Increased ticket sales on the expanded public transport network are predicted to be worth £69m a year - but that will be swallowed up by the £74m a year that will need to be reinvested to keep the system in good order.

And other schemes linked to the TIF bid - including better park-and-ride, upgrading interchanges, Oystercard-style tickets and real-time passenger information - are likely to cost a further £48m year.

The consultation documents say cash is only expected to become available for further public transport improvements `towards the end of the package lifespan'.

AGMA chiefs say the charge-for-cash deal is the only way of raising such a significant sum for Greater Manchester's trams, trains and buses.

They have calculated they would have to raise the average council tax bill by £215 a year, for 25 years, to achieve the same effect.

Lord Peter Smith, leader of AGMA, said: "We have looked at all the available options and the bottom line is that [this] is the only source of funding capable of delivering a world class transport system to Greater Manchester."