Indie bike retailers call for urgent reform of Cycle to Work schemes
Posted on in Business News , Cycles News
Cycling Weekly has reported independent bike shops across the country continuing the call for reform of the Cycle to Work schemes in their current format and encouraged the government to help educate large employers on the negative wider social impact some of the schemes on offer have.
Business owners, alongside the Association of Cycle Traders [ACT], have spoken out against the flaws the current schemes have and called on the government to reform the programme, which allows people to save tax on bikes via 'loaning' them from their employers.
Since Labour won the UK general election in July, traders have a renewed hope that the newly formed government will put into action a plan for overhaul at a quicker rate.
"The changes I’d like to see would be the government taking the lead on this," Gavin Hudson ACT member and owner of Butternut Bikes in north London told Cycling Weekly. "I’d like to see a review in order for this to help local businesses in communities that make up individual MP’s constituencies.
"I’d also like to see more accessibility to the schemes for lower earners. But how we widen access to it without losing the benefits that are there is quite a big conundrum.
"Finally I’d like to see encouragement for large scale employers to use more than one scheme to enable employees to make an informed decision about picking a scheme that might help support a local business to them."
When initially set up 25 years ago, the aim of the Cycle to Work initiative was to give employees of enrolled companies tax deductions on bikes and equipment, which are paid through salaries, in a bid to get more people commuting by bike. Customers received vouchers from Cycle to Work scheme providers, before redeeming them at retailers that had signed up to the scheme. It allows prospective cyclists to save up to 42% on the cost of a full price bike, with payments automatically deducted from their salary.
The scheme's format has mainly stayed the same ever since, although big retail chains now have their own schemes on offer which see them take a large commission from sales made elsewhere.
Larger Cycle to Work companies, like Cyclescheme, Cycle Solutions and Halfords Cycle2Work, charge commissions of up to 10%, while others like Gogeta or the Green Commute Initiative (GCI) ask for 3% and 5/6% respectively and are thus favoured by local bike shops.
Another London-based cycle trader, who asked to remain anonymous, echoed Hudson’s view. They said that companies opting to use schemes provided by firms like Halfords were continuing to hurt their business in the long run.
Halfords Cycle2Work vouchers can be used at independent bike shops as well as at the retail giant itself.
The person in the cycle business said: "It’s the local councils, the hospitals, they’re all on the Halfords scheme… The most galling thing for me about the Halfords scheme is that it’s so successful for Halfords, often because they themselves can’t supply the bike that people want.
"They’re not [always] fronting any capital, putting a bike in the shop or anything like that to sell that bike. They’re taking a margin from every other bike that they don’t stock in the country, as well as all the other stuff that they do stock."
"But I can’t imagine many big businesses and employers would be interested in hearing that. Using schemes like that works for them and they have no incentive to change."
The same trader added that their biggest gripe with the current setup was simply that the scheme's current form meant that they could easily be legitimately manipulated by high earners while others in low paid jobs are excluded.
"I’m in a nice neighbourhood in London, and I would say 60 to 70% of our sales go to high-rate taxpayers who are using that tax break to their full advantage to buy a nice bicycle. And I don’t think that was ever the intention of these schemes," they added. "I don’t blame those people at all, as they’re obviously taking advantage of a legitimate scheme that’s out there.
"But I don’t think the way the schemes are set up are reaching the right people. They’re not getting more people commuting to work by bike.
"And they are certainly not helping lower income people because they can’t take advantage of these schemes right now. It does have to be that you’re earning well above minimum wage if you want to take advantage of them all right now really… I do think that’s an unintended consequence of all of this, the one who benefits the most is the one who needs the scheme the least."
Mark James of the Yorkshire-based JE James chain of cycle shops, another ACT member, has been one of the loudest voices to call for change recently. When asked what changes he would like to see Labour make, James said he wanted to cut out the "bloated fat cats" in the middle.
"What I want to see is the private sector being taken out of the government's job," he said. "Because if the government wants to increase cycling and make it more accessible for everybody then they need to do it directly.
"All they need to do is provide a code, somebody logs on with their details, national insurance number and everything else and they just do it through the government portal. They do that for other things, so I don’t see a need to reinvent the wheel on this. They do similar for other schemes, so it should be straightforward to put in place."
Jonathan Harrison from the ACT said that he was optimistic that plans for change could be actioned quickly under Labour.
He said: "In terms of the new government coming in, we are hopeful they will be more receptive to what we are trying to achieve, and we will be working towards some of the reform steps we outlined previously. Hopefully it could be seen as an easy win for them which helps to meet their green objectives."