The Question: There’s talk on the grapevine of the Cycle to Work Scheme perhaps facing the chop
in the near future. What would the cancellation of C2W mean for your business and what portion of your sales do these vouchers contribute at present? Has take up of the scheme been increasing or declining for your business?
Within this retail panel we’ve also asked the experts for their take on the rumours for the sake of context. Daniel Gilborn at Cyclescheme says:
“As part of the Chancellor’s Autumn Statement 2015, the Government announced that ‘it remains concerned about the growth of salary sacrifice and flexible benefit arrangements and their cost to the taxpayer.
The Government said it will gather further evidence, including from employers, on salary sacrifice arrangements to inform its approach’. HM Treasury have held some work shops with Employers (of which Grass Roots Group, parent company of Cyclescheme have been a part of these) to gather evidence on Salary Sacrifice and the important part they play in both employee engagement and driving a health and well being agenda·
When the Government are referring to the ‘review of salary sacrifice they are actually referring to the ‘tax foregone’ by HM Treasury. This is a technical issue about how the employee pays for the benefit rather than the benefit itself (i.e. the benefit would remain in terms of legislation to allow an employer to ‘hire’ a bike to their employees without BIK tax being incurred)·
As you will have seen from the media, the focus has been on pensions, mainly, but also looking at which benefits support Government policy objectives and which don’t (i.e. Cycle to Work is the only proactive ‘tool’ that supports their health and well being policy objectives versus car parking for example, which does not).
It is the tax foregone that is the focus for the Treasury and, in this respect, that this is why pensions have been in the spotlight. This is a great opportunity for the Industry to show positive support via its MPs for a benefit that drives behaviour change, with over 63% of participants being new and returning cyclists (i.e. haven’t cycled for a considerable period of time and thus are new customers).
Furthermore, over 70% of participants would not have bought a bike through their employer without the savings available. Now, more than ever, it is important that the industry demonstrates its support otherwise they could inadvertently stall the appetite for cycling to work both at an industry and employer level.”
The bike to work scheme is a double edged sword. The fact that it pushes a lot of cyclists to only a few retailers is not good for the wider IDB sector, but, and it’s a big but, it does get an awful lot of people onto bikes who otherwise most likely would never consider taking it up. So it does expand the potential cycle market.
The bigger questions though are how many of these buyers that are pushed to the larger scheme providers would have otherwise bought a bike from an IBD? And, how many of the bikes purchased on the scheme wind up on the second hand market in almost showroom condition, thus depressing the sale of a new bike?
Reality is, we’ll never know for sure as all we have to go on is anecdotal evidence, which is notoriously unreliable. My instinct is that the typical IBD will be no worse or better off one way or the other.
For us, we do very little on the scheme, we’ve never chased the business or promoted it, so it’s never made up more than 10% of our cycle turnover, less than 4% in the last year, so if it is dropped we would expect to see a tiny increase in sales as a result.
As for whether it will be dropped or not, I tend to think not. Not in the next review at least.
Cyclescheme sales currently make up about 13% of our turnover. This is down about 2% from a year ago, so it’s declining, but not significantly.
13% is a sizeable chunk of business, so if the scheme was discontinued, it would have some negative effect on our sales. However, we’re not a “discount” shop and we therefore depend upon healthy margins – the 10% (sometimes more) the scheme costs us has quite a major effect on our bottom line, so it’s hard to judge just how much effect it would have in terms of profitability. It’s not critical to our survival, so we could live without it.
Overall, the scheme has got more people cycling in general, so ultimately it has worked in our favour (long term) and would have a negative impact if scrapped.
Bike sales via the scheme slowed down about three or four years back after the law changed. It was great back in those days and it did help get more people on bikes.
We still get occasional sales on the scheme, but nothing substantial. Therefore, from a business perspective, it doesn’t worry me if it’s axed.
Neil, George Halls Cycle Centre
Personally, we only take 5 to 10 cycle to work scheme sales a year. It has never taken off here in Market Harborough as there are no real big employers anymore.
The town is ideal for cyclists as it only takes 10 minutes to ride from one side to the other. We have cycle lanes run through the town, including Sustrans route No6A. In a car that often takes over 20 minutes.
We get a few sales from the Royal Mail employees and the odd one from the local prison, but the others are from commuters who work in London, (Under 1 hour on the train) or the other big factory towns nearby (Lutterworth & Corby).
I think it would be a great shame if it is scrapped as I think it has done wonders for the trade. It has certainly got a lot of bums on seats and people out of cars.
I think a better scheme would be to scrap the VAT on bicycles as it is green transport, but then introduce an M.O.T on all bicycles – both children’s and adult’s – and even go as far as tax and insurance on full electric bikes. Government levies and duties on this could then go towards introducing new cycle lanes and improving the existing cycle network already around.
It would certainly put paid to the death traps on the road seen in every bicycle workshop across the land and it would also put paid to the motorist who tells cyclists to get off the roads they have paid for through their car tax.