The Labour government’s reported plans to reintroduce a spending cap on purchases made as part of the Cycle to Work scheme have been criticised by a coalition of the scheme’s biggest providers, who have argued the move could undo years of progress when it comes to encouraging cycling and decreasing car use, while potentially discriminating against older people and those with disabilities.

On Thursday morning, the Financial Times reported that Chancellor of the Exchequer Rachel Reeves is expected to limit how much users of the Cycle to Work scheme can spend on bikes and other cycling equipment when she unveils her Budget at the end of the month.

Sources familiar with the government’s Budget preparations told the FT that ministers believe that the Conservative decision to lift the scheme’s previous £1,000 cap in 2019 was not the best use of public funds, with one source concluding that “taxpayers shouldn’t be footing the bill for luxury leisure”.

Introduced in 1999 by Tony Blair’s Labour administration, the UK government’s Cycle to Work employee benefit scheme offers a tax-friendly initiative which enables people to buy a bike and cycling accessories through salary sacrifice.

In 2019, the Conservative government announced a revamp of the Cycle to Work scheme, making it easier for bikes worth over £1,000 to be purchased using the initiative.

This formed part of a drive to increase the use of e-bikes and cargo bikes, typically more expensive than their standard counterparts, to “help tackle congestion, speed up commutes, and cut travel costs”, and to encourage families to commute by bike.

> Labour clamps down on “tax breaks for high earners riding £4,000 e-bikes in the Surrey Hills”, as Rachel Reeves to reintroduce Cycle to Work spending cap in Autumn Budget

However, the rising costs of the scheme, and the perception that it is now abused by some to purchase more expensive road bikes not designed for commuting, has seemingly prompted the Labour government to reform the initiative by reintroducing an as-yet undetermined spending cap.

“Cycle to Work should be about helping ordinary commuters switch to greener travel, not giving tax breaks to high earners buying £4,000 e-bikes for weekend rides in the Surrey Hills,” one government source reportedly said. “Taxpayers shouldn’t be footing the bill for luxury leisure.”

Cyclists in London male and female in cycle lane
Cyclists in London male and female in cycle lane (Image Credit: Simon MacMichael)

Following the FT’s report on Thursday morning, the apparent plans have been criticised by cyclists and commentators, who have noted Labour’s latest money-saving measure is at odds with its stance on tax breaks for electric vehicles.

In a statement issued to road.cc, the Cycle to Work Alliance, a coalition of the scheme’s five largest providers, said they are “concerned” about the potential effects on cycling in the UK if the government reduces the scheme’s tax benefits.

“This would impact a vital and popular employee benefit which has enabled more than two million people to access cycle commuting since it was launched by a Labour government 25 years ago,” Steve Edgell, the Alliance’s chair, said.

“In 2019 a spending cap of £1,000 was abolished, as it was preventing people from being able to access the equipment they needed for everyday commutes. By effectively excluding e-bikes and adapted cycles from the scheme, the cap discriminated against older people and those with disabilities.

“We are keen to work with government to ensure that changes would not unintentionally damage the scheme and the significant benefits it delivers for public health, the environment, and the UK’s cycling retail sector.

“Any new cap must not undermine recent efforts to ensure that everyone who wants to participate in the Cycle to Work scheme can do so easily.

“Cycle to Work has been central to government efforts to promote cycling and active travel, saving those who participate more than £1,200 annually on average.

“Making reforms to the scheme risks undoing the progress that has been made to increase uptake of cycling and decrease traffic and carbon emissions. As an Alliance, we will continue advocating for an initiative that has enabled workers across the country to cycle rather than drive to work.”

Cyclists in London at traffic lights in cycle lane
Cyclists in London at traffic lights in cycle lane (Image Credit: Simon MacMichael)

Reeves’ Budget plans were also criticised by active travel charity Cycling UK, who argued that the “sensible” money-saving tactic could cost the government in the long run.

“The Cycle to Work scheme plays a really important role in encouraging people to travel in a healthy and more affordable way – but we need a more progressive plan to support more people on lower incomes, or in unstable work, to cycle,” Sarah McMonagle, Director of External Affairs at Cycling UK, said in a statement.

“While capping the scheme may sound like a sensible way for Ministers to save money, in reality, it will cost the government a lot more. For every £1 spent on the Cycle to Work scheme, we see over £4 in returns: boosting productivity, reducing sick days, and saving households money.

“With the popularity of e-bikes and cargo bikes soaring, supporting these trends is not just good for individuals, but for the economy as a whole.

“Any proposal to cap the scheme must consider people who require higher-cost cycles, such as cargo bikes or assisted cycles for disabled people. If the government is serious about providing equal access to active travel, it needs to tailor the scheme to take into account women, families, those with disabilities and people in lower paid or unstable work.”