Cycling retailers demand changes to “flawed” Cycle to Work scheme that puts “business profits well ahead of cycling development”

A body representing independent cycling retailers in the UK has demanded “immediate” changes to what it describes as the government’s “flawed” Cycle to Work scheme, arguing that the initiative is dominated by providers who “put business profits well ahead of cycling development” and describing Cyclescheme’s decision to prevent retailers from charging additional fees as “the straw that broke the camel’s back”.

The Association of Cycle Traders (ACT) released a statement this week calling for reform of how the Cycle to Work employee benefit scheme, the government’s tax-friendly initiative which enables people to buy a bike and accessories through salary sacrifice, is implemented, in order to enable the scheme to “engage all parties in the supply chain” and to grow the initiative “in a manner that allows the cycle trade to make some retained profit”.

The ACT – along with its parent company, the British Independent Retailers Association (BIRA) – also said it has been approached by a “large volume” of cycling retailers throughout the UK calling for change to Cycle to Work, the majority of whom they claim “are unwilling to speak publicly for fear of being excluded from business opportunities” by the scheme’s established providers.

The association’s proposed changes, it claims, will “help realise the full potential of Cycle to Work and most critically, by working together, get many, many more employees cycling to work”.

> “Would they like the shirt off my back as well?” Bike shop owners fume as Cycle to Work scheme stops retailers charging additional fees

The call for reform comes in the wake of the decision by Cyclescheme, the UK’s largest provider of access to Cycle to Work, to update its retailer partner agreement, preventing retailers from charging additional fees on bikes purchased under the scheme – a decision described by traders as “incredibly short-sighted” and “infuriating”, and one that could lead to bike shop owners losing money.

Cyclescheme announced at the end of November that it is updating its policies in order to, it claims, “ensure fairer pricing for Cyclescheme customers” and guarantee that “participant experience is in line with their expectations”.

The changes, which will come into effect on 22 December, will see Cyclescheme ask their 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 when announcing the new policy.

“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.”

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The changes, however, have been criticised by ACT, who argue that independent retailers have “wrongly been the cash cow of Cycle to Work for over two decades”.

“The Cycle to Work employee benefit scheme introduced by the UK Government over 23 years ago has never reached its full potential and is at risk of losing further momentum at a critical time for the industry and cycle usage in the UK,” ACT said in a statement, launching its campaign for reform of Cycle to Work.

“The delivery structure of Cycle to Work is flawed primarily due to the lack of direct engagement by the larger entities within the UK trade and the drive for commercial income by the established players in the delivery of the employee benefit.

 “There are two dominant players in the market: Halfords and Cyclescheme and an ‘alliance’ of providers that appear to put business profits well ahead of cycling development.”

ACT also pointed out that, “as an entity within a large US corporate business”, Cyclescheme’s published accounts from 2010 to 2022 “report profits before tax of over 58 percent of revenue”.

“That’s c.£55m that could have been re-invested into the UK cycle industry and which has largely been drawn from the £90m plus of revenue from the UK independent cycle retail sector,” the association said.

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The statement continued: “The independent retail cycle sector has wrongly been the cash cow of Cycle to Work for over two decades and this has to change now.

“The recent enforced changes in pricing policy applied by some parties and blamed erratically upon FCA legislation is simply the ‘straw that broke the camel’s back’.

“Wider industry fears in tackling this long-term issue have been fired by industry lethargy, limited financial exposure for many, and the bogey man threat that Cycle to Work legislation might be withdrawn, a fear that an increasing number of IBDs are now viewing as an ‘opportunity’.

“At a time when the industry is actively seeking greater support from government for cycling – including a call for more cycle incentive subsidies – one of the most obvious actions that the industry should take itself is reform of the Cycle to Work employee benefit.

“Once we have a united, fully participating industry in this area, the ACT believes that there is lots of room for further development with government, especially around electric incentives that the car industry benefits from with government support in the UK.”

The ACT concluded by noting that “alternative schemes are in place charging as little as 3 percent commission, but the industry needs to come together to win employer schemes, put aside brand competition, and focus on collectively winning more cyclists and make more of Cycle to Work together.”

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When asked about the critical response to their recent policy update, Cyclescheme’s Warren told road.cc that the changes were made as a result of customers complaining about being hit with “unexpected charges” when buying bikes or equipment under the scheme, and that the updates would improve the customer experience and lead to more people taking advantage of the scheme.

“At Cyclescheme, we are proud to partner with over 2,600 cycle retailers across the UK and recognise the importance of our network,” Warren told road.cc.

“The considered retailer update is rooted in united commitment and passion to get more people cycling.

“Feedback from our scheme participants has shown that there has been some frustration when faced with unexpected charges to obtain selected bikes and/or equipment.

“We are confident that by creating a consistent and transparent set of guidelines for retailers, this will improve the user experience for our shared customers, and therefore increase the uptake of the Cycle to Work scheme in the long term.”