The idea
The computerised system of licence plates is the wort I have come across. If I witnessed an accident and the car drove off I would be hard pushed to remember the complicated licence number. If the first letters of the plate showed a letter designating a town or city at least one would be able to report that the car came from Manchester or Leeds for example. The main cities could have one letter for the city followed by a hyphen and other designating letters and numbers.
The most important factor would be the recognisable first letter or letters designating the location.
Why is it important?
The police would have an easier job tracking down the offender.