{"id":286238,"date":"2025-11-27T14:10:10","date_gmt":"2025-11-27T14:10:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/286238\/"},"modified":"2025-11-27T14:10:10","modified_gmt":"2025-11-27T14:10:10","slug":"labour-ditched-cycle-to-work-cap-two-weeks-before-budget-after-deciding-it-wasnt-worth-the-revenue-as-bike-shops-hail-common-sense-prevailing","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/286238\/","title":{"rendered":"Labour ditched Cycle to Work cap two weeks before Budget after deciding it \u201cwasn\u2019t worth the revenue\u201d, as bike shops hail \u201ccommon sense prevailing\u201d"},"content":{"rendered":"

Labour backtracked on its plans to introduce a spending cap<\/a> on purchases made as part of the Cycle to Work scheme just two weeks before the Autumn Budget, after concluding that the potential political fall-out to the proposed changes \u201cwouldn\u2019t be worth the revenue\u201d, a senior government source has claimed.<\/p>\n

Meanwhile, the Association of Cycle Traders, representing independent bike shops across the UK, has praised the U-turn, describing it as \u201ccommon sense prevailing\u201d and arguing that any cap would have \u201cslammed the door on exactly the people we should be helping\u201d.<\/p>\n

However, the group also warned that the Budget\u2019s business rates reforms fell short of promises previously made by the government and that the delayed closure of the low-value import duty loophole will force bike shops in the UK to \u201cendure another four years of unfair competition\u201d.<\/p>\n

Earlier this month, the Financial Times reported that Chancellor of the Exchequer Rachel Reeves was planning to limit how much users of the Cycle to Work scheme<\/a> can spend on bikes and other cycling equipment as part of the government\u2019s Autumn Budget.<\/p>\n

Introduced in 1999 by Tony Blair\u2019s Labour administration, the UK government\u2019s Cycle to Work employee benefit scheme offers a tax-friendly initiative which enables people to buy a bike and cycling accessories through salary sacrifice.<\/p>\n

In 2019, the Conservative government announced a revamp of the Cycle to Work scheme, making it easier for bikes worth over \u00a31,000 to be purchased using the initiative<\/a>. This formed part of a drive to increase the use of e-bikes and cargo bikes, typically more expensive than their standard counterparts, to \u201chelp tackle congestion, speed up commutes, and cut travel costs\u201d, and to encourage families to commute by bike.<\/p>\n

>\u00a0Labour\u2019s Cycle to Work limit \u201crisks undoing progress to encourage cycling, decrease traffic, and reduce carbon emissions\u201d, say scheme providers<\/a><\/p>\n

But according to the report in the FT earlier this month, Labour ministers believe that this decision to lift the cap was not the best use of public funds, with one source concluding that \u201ctaxpayers shouldn\u2019t be footing the bill for luxury leisure\u201d.<\/p>\n

\u201cCycle to Work should be about helping ordinary commuters switch to greener travel, not giving tax breaks to high earners buying \u00a34,000 e-bikes for weekend rides in the Surrey Hills,\u201d the government source reportedly said, though no details were provided about what that cap would entail.<\/p>\n

\"LondonLondon cyclists (credit: Ayad Hendy via Unsplash)<\/p>\n

However, when the Autumn Budget was unveiled by the Chancellor on Wednesday, there was no mention of the Cycle to Work scheme or its spending cap<\/a>. Later that afternoon, the Treasury confirmed to road.cc that there was \u201cnothing announced on Cycle to Work at the Budget\u201d and no policy change was set to be made.<\/p>\n

The apparent U-turn was praised by the Cycle to Work Alliance<\/a>, a group representing the scheme\u2019s five largest providers, with chair and retailer Steve Edgell saying he was \u201chappy\u201d that no changes had been made and that he will continue to \u201cwork closely with government to ensure the scheme remains one of the most popular and successful workplace initiatives\u201d.<\/p>\n

>\u00a0No change to Cycle to Work Scheme in Budget, Treasury confirms \u2014 despite reports spending cap would be introduced<\/a><\/p>\n

So what happened to Labour\u2019s reported attempt to reintroduce a Cycling to Work spending cap?<\/p>\n

On Thursday morning, the Financial Times<\/a> reported that a government source \u2013 seemingly the same figure who leaked the plans in the first place \u2013 has claimed that the Chancellor had been planning to forge ahead with the proposals as recently as two weeks ago.<\/p>\n

However, the source said that officials had since \u201crecalibrated their calculations\u201d for how much money the raid would raise.<\/p>\n

\u201cIn the end it wasn\u2019t worth the revenue,\u201d he told the FT.<\/p>\n

To underline the negligible impact overhauling the scheme would have had on the government\u2019s coffers, the total cost of running Cycle to Work in the 2024-25 financial year was \u00a3130m.<\/p>\n

\u00a0\u201cI think the whole fiddling around the edges and creating a lot of noise over something that would have had very little effect was slightly bananas,\u201d Will Pearson, a director of high-end bike manufacturer Pearson Cycles, told the Financial Times.<\/p>\n

\"CyclistsCyclists in London talking in cycle lane (credit: Simon MacMichael)<\/p>\n

Meanwhile, the Association of Cycle Traders (ACT), which represents 4,000 independent bike shops in the UK, praised the last-ditch decision to scrap the policy change, and said that rumours of a new \u00a31,000 limit on the scheme had caused unnecessary uncertainty for both retailers and employees.<\/p>\n

\u201cThe Cycle to Work scheme is a lifeline for thousands of workers who want to swap the car for the bike, and for the independent retailers who help them do it,\u201d the ACT\u2019s director Jonathan Harrison said in a statement.<\/p>\n

\u201cReimposing a cap would have been a backwards step at exactly the time we need to be encouraging cleaner, healthier travel. We\u2019re relieved the Chancellor has listened to the evidence and left the scheme alone.\u201d<\/p>\n

Harrison argued that a cap would have particularly harmed families seeking to purchase e-cargo bikes as an alternative to car journeys, as well as older cyclists reliant on e-bikes for longer commutes, and disabled employees requiring specially adapted cycles.<\/p>\n

\u201cE-bikes and cargo bikes cost more, but they\u2019re the tools that make cycling practical for people who couldn\u2019t otherwise manage it,\u201d he said.<\/p>\n

\u201cA cap would have slammed the door on exactly the people we should be helping.\u201d<\/p>\n

>\u00a0“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<\/a><\/p>\n

Nevertheless, the association \u2013 which has in the past been critical of how the Cycle to Work scheme is administered and its impact on independent retailers<\/a> \u2013 also pointed out that the initiative is in need of reform in a number of areas, including high commission rates charged to retailers, the \u201crestrictive\u201d commute-to-work element, and access for those on minimum wage.<\/p>\n

Away from Cycle to Work, the ACT also welcomed wider Budget measures affecting independent cycle retailers, including permanent business rates relief for retail, hospitality, and leisure properties.<\/p>\n

However, Harrison said that he is disappointed at the decision to delay the closure of the low-value import duty loophole.<\/p>\n

\u201cIndependent bike shops have been hammered by business rates for years while online giants operate from warehouses on a fraction of the cost,\u201d he said.<\/p>\n

\u201cPermanently lower multipliers for high street retail is exactly the reform we\u2019ve been calling for. However, waiting until 2029 to close the import duty loophole is far too long. The USA closed their loophole in six months and Europe is acting next year. Why should UK bike shops endure another four years of unfair competition from overseas sellers dodging duties and safety standards?\u201d<\/p>\n

And Andrew Goodacre, the CEO of Bira independent retailers group, of which ACT is a part, also warned that the Budget\u2019s business rates reforms fell short of promises previously made by Labour, leading to a \u201cperfect storm of cost pressures\u201d for bike shops and other retailers.<\/p>\n

\u201cThe original proposals talked about reducing multipliers by up to 20p for smaller properties,\u201d Goodacre said.<\/p>\n

\u201cWhat we\u2019ve actually got is a 5p reduction. The government has missed a real opportunity to tackle an unfair tax. Despite claims of support, many independent retailers will face bill increases of up to 30 per cent next year. With the National Living Wage rising to \u00a312.71 and another four years before import duty loopholes close, independent retailers are facing a perfect storm of cost pressures.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Labour backtracked on its plans to introduce a spending cap on purchases made as part of the Cycle…\n","protected":false},"author":2,"featured_media":284693,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[4985,101,56,54,55],"class_list":["post-286238","post","type-post","status-publish","format-standard","has-post-thumbnail","category-cycling","tag-cycling","tag-sports","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/286238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=286238"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/286238\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/284693"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=286238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=286238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=286238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}