Cycle to Work Scheme gets vote of confidence for Labour | Helen Pidd

We can all argue till the cows come home about what Labour has and hasn't done for Britain since taking power in 1997. But if I had to vote for one Labour initiative which has brought unmitigated good to the country, I would plump for the government's Cycle to Work Scheme.

Right enough, that has a lot to do with the fire engine red Fahrrad I bought using a voucher last year: £670 in the shops, but it'll cost me just over half that once all the tax deductions are made. Oh, and how she rides! Hub gears, brakes that never squeak, a dynamo lighting system, a frame still light enough to lug up a few flight of stairs every day...

My approval isn't entirely based on self-interest, however. According to figures from Halfords, over 400,000 employees from more than 25,000 companies have joined the scheme since its introduction just over a decade ago as part of the 1999 Finance Act. More people on bikes equals a more civilised country in my book.

And yet Cycle to Work isn't popular in all quarters. Many smaller bike shops resent it - or, more accurately, the "middle men" firms such as Cyclescheme, which act as go-betweens, administering the tax efficiency programme on behalf of businesses. Though most bike stores will tell you they have seen an increase in sales as a result, they hate paying the 10% commission charged by Cyclescheme and its counterparts for doing what one bike industry bod described to me as "very little - all they do is issue the vouchers".

When my boyfriend bought a Planet X carbon road bike using a voucher earlier this year, Planet X charged him a flat £100 fee for doing so. "If we didn't charge the £100 we would probably make a loss because we sell at such low margins anyway," Caroline Hatchman from the firm told me. When I got my Cycle To Work steed, the shop had a little grumble about losing 10% of the price to the middle man too.

Issuing the vouchers is certainly a very lucrative business. Last year Cyclescheme reported sales of £22.7m, and has grown so quickly since launching in 2005 that the Sunday Times listed it as the number one fastest growing private company in the UK in 2009. But the firm insists it earns its commission by carrying out pricey marketing of the scheme nationwide. A spokesman told me: "Now with over 1,500 partner stores, we at Cyclescheme know that all of these dealers have made considered decisions and are aware of the marketing that Cyclescheme undertake on behalf of the Cycle to Work scheme and on ensuring consumers know where to find their stores."

Carlton Reid, who edits and is the author of a forthcoming book called Bike To Work, says he has noticed many traders whingeing about the commission on the trade only forum

"I find this bizarre," he says. "Capitalism is based on charging more for goods or a service than it costs. Cyclescheme is offering a service and so needs to be paid for this service. Nobody is holding a gun to a bike shop owner's head, forcing use of Cyclescheme, or any of the other third party services. Bike shops could organise to do the Cycle to Work scheme paperwork themselves (some do, such as Evans and Edinburgh Bicycle). It's time consuming but not rocket science. However, it's far easier to use an existing third-party service, and pay the commission. Once a bike shop has put the voucher in the till, it's up to them to capture that customer for later, non-commission sales."

• Helen Pidd's book, Bicycle: Love your bike: The complete guide to everyday cycling is out on 27th May.

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