How do you propose they handle the scenario then where a driver receives a bill for entering the zone on a particular day, but then claims they were never driving on that day? Ordinarily they could retrieve the photo and use that to confirm the charge.
They have a list of people that have (and therefore, those that haven't) paid the congestion charge for that day. So in keeping with the parent's suggestion that only images showing cars that have committed an offence should be stored, they'd still have the photo showing them driving on the day having not paid the charge.
You could handle it same way they handle people claiming that the radar gun is wrong or that the parking meter shorted someone on time: the instrument is calibrated so the burden is on you to prove it is defective.
Radar guns are terribly inaccurate. In about 1 in 100 readings they are wildly off. Even when calibrated. I know this because my dad - who has an IEEE medal for his work on the laser, has testified as an expert witness on lasers and drives like an old Chinese woman - was clicked doing 90 in a 55 by a laser gun. He did the research and found the test results showing that in 1 in 100 readings you should expect an outlier such as reading 90 when the car was going 55. Guess what, it doesn't matter. No judge in the world cares. They aren't going to allow people to question the accuracy of these devices because it would destroy their revenue stream. Anyway, that's my rant on radar guns.