"Cycle to work schemes are sucking the lifeblood out of cycle shops": Bike shops tell Parliamentary Committee of "need for urgent systemic change" to Cycle to Work scheme

The Association of Cycle Traders (ACT) and senior figures from cycling retailers have met with MPs from the All Party Parliamentary Group for Cycling & Walking (APPGCW) to make their case about the "need for urgent systematic change" to the Cycle to Work scheme. The meeting comes two months after the ACT and bike shops hit back at one of the scheme's providers, Cyclescheme, for deciding to prevent retailers from charging additional fees on bikes purchased using the scheme, a move described by the representative of independent cycle retailers as the "straw that broke the camel's back".

APPGCW co-chairs Labour MP Fabian Hamilton and Conservative colleague Selaine Saxby met with ACT director Jonathan Harrison, Mike Rice of Balfe's Bikes, and Mark James of JE James, the context for the meeting that more than 500 bike shops have now signed up to the ACT's campaign for change to the Cycle to Work scheme.

And while November's announcement from one of the scheme's main providers Cyclescheme that it would be updating its policies – preventing retailers from charging additional fees on bikes purchased under the Cycle to Work scheme – is fresh in the mind, and was branded "incredibly short-sighted" and "infuriating" at the time, the meeting with MPs brought up a more wide-ranging list of concerns than just that.

"The ACT is calling for a collaboration of everyone in the cycle industry to work together to reform Cycle to Work as the priority growth strategy for the cycle trade and to increase cycling for all," Mr Harrison told the committee meeting.

Highlighting challenges for retailers with the current operation, he added that the scheme is too complicated: "Typically, the employer pays for the voucher, the provider owns the bike, the worker hires the bike, the voucher is paid back via salary sacrifice and there is often a misinterpretation around ownership and many users never truly understand how the scheme actually works.

"The end of the initial hire period is another area of complication which needs reviewing. Typically, workers enter an extended hire period after salary sacrifice finishes. During the extended hire period the bicycle was still owned by the provider, with some providers charging fees providing an additional source of income whilst others do not. Often these fees come as a surprise to the end user."

Most importantly he suggested the scheme no longer fits the purpose for which it was originally intended – to get people cycling to work. The ACT will also be meeting with representatives of Cyclescheme, the Cycle to Work Alliance and Green Commute Initiative "in the coming weeks" to progress discussions on the matter, but the message from cycling retailers present at the committee meeting was clear.

"Sucking the lifeblood out of cycle shops"

Mr Rice is the chairman of Balfe's Bikes, the cycling retailer with 12 stores across Greater London, and began by pointing out it is "encouraging that the ACT was invited to this meeting as the views of cycle retailers have been absent from these meetings for a very long time".

"With cycle retailers currently bearing all of the cost of funding the scheme, with a significant erosion of profits and a large number of cycle businesses going bust or ceasing to trade over the past five years, it is no longer sustainable for cycle retailers to continue to fully fund the cost of the scheme and thus reform is required to enable cycling as a mode of transport or leisure activity to grow over the coming years," he said.

Mr James, a partner at JE James, the cycling retailer with shops in Chesterfield, Rotherham and Sheffield, went even further and accused cycle to work schemes of "sucking the lifeblood out of cycle shops".

"I hoped I would have been able to deliver a speech about how Cycle to Work was detrimental to the industry and most businesses within it. I was shocked by the lack of understanding of what and how the bike to work providers operate the schemes," he said.

"We need every retailer to find their local MP's surgery and use the information we have compiled to put our case face to face. No cycle retailer should pay for a scheme, full stop. If anything we should be paid for the extra admin involved. I sadly would not want my two kids to follow in my footsteps, because the cycle to work schemes are sucking the life blood out of cycle shops."

Mr Harrison of the ACT added that while he was not here to offer a solution, only to "to highlight the challenges faced by independent cycle retailers", it needs to be more inclusive and more broadly structured, he suggested.

For example, under the current scheme, salary sacrifice means many low paid  workers are unable to access its benefits, a cohort that the ACT believes would particularly benefit from the Cycle to Work scheme, enabling a switch from public transport or other means of transport to cycled journeys. Likewise, self-employed or those whose employer does not offer the Cycle to Work scheme cannot access it.

“We should be exploring ways to make the scheme more inclusive, ensuring that a broader range of people can benefit, encouraging cycling for everyone," he told the committee.

The issue of inequitable distribution of costs and profits associated to the Cycle to Work scheme was also raised by Mr Harrison who said the "very low margins in the cycle retailer sector and future increased costs with the rise in the UK minimum wage means they can no longer absorb the charges levied by Cycle to Work providers".

"Cycle retailers are an essential part of the Cycle to Work supply chain and have helped grow the scheme to where it is today," he said. "Fees need to be fair, transparent and consistent – the fees charged by different providers currently range from four per cent to 15 per cent, some schemes have a cap, others do not.

"There is not a greater administrative burden in processing a Cycle to Work voucher for a £1,000 bicycle compared to a £10,000 bicycle, it would be fairer to establish a set fee to reflect the work of the provider."

He went on to suggest that since manufacturers and distributors also benefit from sales going through the scheme they should pay a portion of the fees levied by Cycle to Work providers.

"At the moment there are no universal terms and conditions that scheme providers must adhere to, which is proving detrimental to ACT members," he said.

"With a fully joined up industry support plan we believe that we can significantly increase the volume of transactions that go through a new look Cycle to Work scheme, convert sceptical independent cycle retailers to promote the scheme and most importantly have a material impact upon the public cycling more, building a momentum that will grow and grow.

"As the representative of independent cycle retailers we would welcome the opportunity to work with government to address the current issues with the scheme to ensure that it is accessible to many more and provides a workable, sustainable margin for the many hundreds of small independent businesses operating in the sector."

> New Cycle to Work 'Flexi Voucher' founder claims to offer "better experience for cyclists"... but existing provider says it "mimics" its own scheme and is not the "real thing"

The discussion follows on from the initial calls from many in the industry, made in the final months of 2023, for changes to the way the Cycle to Work scheme works and impacts retailers.

Cyclescheme's removal of the ability for retailers to charge additional fees was much-criticised and branded "incredibly short-sighted" and "infuriating".

The Cycle to Work provider defended the move and said it would be implemented in order to "ensure fairer pricing for Cyclescheme customers" and guarantee that "participant experience is in line with their expectations".

The changes, which came into effect on 22 December, will see Cyclescheme ask its retailer partners to "commit to a policy of no additional fees and full availability as advertised when a customer redeems a Cyclescheme certificate". The updates, Cyclescheme says, also reflect the most recent FCA regulatory requirements and compliance policies.

"We are committed to getting more UK employees cycling to work, by removing the financial and accessibility barriers associated with getting a new bike," Adrian Warren, senior product director at BHN Extras, Cyclescheme's parent company, said in a statement.

"This update to our retailer agreement ensures that Cyclescheme customers are being met with consistent and transparent pricing, reducing confusion for retailers and participants, and aligning with regulatory guidance.

"With a shared goal between retailers and Cyclescheme to get more people cycling, these changes will create a more positive and fair experience for all participants."