The Cycle to Work Scheme has "helped to prop up the bike market" in the UK, the chair of the Cycle to Work Alliance has said.
His comments came as research published by the Alliance showed that the tax-break system brought £219 million in bike and accessory sales last year. The analysis also showed that it brings the British economy £573 million in annual economic benefits across retail, productivity, health, and household savings.
The C2W scheme allows people to save tax on bikes by 'loaning' them from their employers, allowing prospective cyclists to save up to 42% on the cost of a full price bike, with payments automatically deducted from their salary.
However, it is controversial with some in the bike industry in the UK, with commissions that scheme providers charge being a particular issue for local bike shops. The Cycle to Work Alliance represents Cyclescheme, Cycle Solutions, Halfords and Vivup, a newer benefits provider.
Speaking to Cycling Weekly this week, Steve Edgell, the chair of the Alliance, said: "With the cost of living crisis, it's been a lot more difficult for people to find the money to spend on a high ticket item, which many bikes are, and the C2W scheme is the only way that's actually seen them through that.
"With the savings that people make, and also the affordability that's created by the scheme, by spreading that cost out, instead of having to go into a local bike shop front up the cash for a £1200 bike.
"That has helped to prop up, to an extent, the bike market. We see the scheme as not taking away from revenue the shop earns, but more actually increasing the revenue. It creates a bigger pie."
Some Cycle to Work providers, 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 sometimes favoured by local bike shops. It is up to employers to choose a provider, not an employee.
"Bicycle Association Figures from last year showed that the industry has been in a significant decline since 2019," Edgell continued. "Obviously we had the Covid boom, but since then, there has been a decline in the volume of sales.
"The C2W scheme is showing increased sales. People are using it, not only to get their next bike, but their first bike. We’re increasing the pool of new cyclists, and that’s only going to be good for the industry as a whole."
Edgell stressed that the Cycle to Work Scheme was benefiting more than just the bike industry and those who want to cycle. The UK government makes £4.40 on every pound put into the scheme, according to the research.
"It hits a lot of those government objectives, in terms of the health and wellbeing, and the green credentials and decarbonisation. In terms of what stands out, it is actually one of the UK's most effective and most widely used employee benefits," he said.
"Last year alone, we actually saw £219 million worth of bikes being supplied through the scheme, which is roughly one in four of every adult bike sold in the UK.
"It plays a key part in driving both uptake of cycling, but also it plays a big part in the industry by supporting 1000s of independent bike shops across the country who otherwise wouldn't be making a quarter of the sales that they're making."
It is not perfect yet, however: "We would like to see it embedded a lot more in government policy and promoted by various departments," Edgell added. "The other thing is broadening the access to the scheme, opening it up to lower earners and the self-employed."
Welcoming the research, Lilian Greenwood, the UK's local transport minister, said that the Cycle to Work Scheme was a "real success story".
"This new research shows just how powerful active travel can be, and that's why this Government is investing £616m over the next four years, to help make walking and cycling a safer and easier way to get around, wherever you live and help grow the economy, so we can deliver our Plan for Change," she added.
