Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
In the arch under London Bridge station that houses his electric bike business, Fully Charged, Dan Parsons looked around at the stock and said he was worried about the upcoming Budget.
Under plans first reported by the Financial Times on Thursday, chancellor Rachel Reeves is expected to impose a cap on the maximum value of a bike that can be purchased under the cycle-to-work scheme, first launched in 1999. The scheme allows people to pay for bikes on a “salary sacrifice” basis — out of their pre-tax income — saving 42 per cent of the cost for a higher-rate taxpayer.
Parsons expressed frustration that his sales could be affected by a measure intended to curb the sale of “luxury leisure” high-end performance bikes through the taxpayer-funded scheme. Machines such as the Riese & Müller Load 75 — a cargo bike starting from £8,729 — or the Urban Arrow Active Family Plus — from £4,999 — allowed families to replace cars as a way of ferrying their children around, Parsons insisted.
They are examples of a new breed of cargo bikes, mainly supplied by continental European manufacturers, designed to let parents carry children safely and comfortably.
“I was probably wrongly excited when the Labour government came in because I thought they would be more supportive of small businesses and cycling and walking,” Parsons said.
One government figure justified the planned move by saying the salary sacrifice scheme 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”.
A previous £1,000 cap was scrapped in 2019. It is not yet clear where the new cap will be set.
A worker examines a family e-bike at Fully Charged Bikes, where the average transaction price is £4,000, © Charlie Bibby/FT
Parsons said 35 per cent of Fully Charged’s sales of family cargo bikes were made via the cycle-to-work scheme.
“We’ve got nothing in here for less than £2,000,” Parsons said. “So that’s rather problematic if that’s where they were likely to put the price cap.” The business’s average transaction price was £4,000, he added.
But he insisted that was not a luxury price tag. “That’s going to get you a reasonable cargo bike,” he said.
Parsons’ worries are widely shared across the cycle industry, which has been struggling ever since the coronavirus pandemic boom faded.
“Rather a lot is against us at the moment,” Parsons said.
Will Butler-Adams, chief executive of Brompton Bicycle, the biggest manufacturer of bikes in the UK, said that putting “a barrier between working people and the innumerable benefits of cycling” felt short-sighted.
“At Brompton, our bikes and e-bikes are made right here in the UK, they are built to last and are used by thousands every day to get to work,” Butler-Adams said. “Their price reflects the high-quality manufacturing we pride ourselves on.”
Fabian Hamilton, the Labour MP who chairs the all-party parliamentary group on cycling and walking, said that, if the scheme were to be adjusted, it should be done “with caution”.
“A crude cap would land on the wrong users,” Hamilton said.
In Wandsworth, south-west London, Roman Magula said it would be a “false economy” to scrap the cap.
Magula, founder of London Green Cycles, a specialist supplier, said the cycle to work scheme funded more than 50 per cent of his sales of cargo bikes for families.
Any limit that prevented purchases of quality cargo bikes risked pushing families towards buying cheaper, Chinese-made imports online, Magula said.
Such bikes have been widely associated with battery fires. They also had a far shorter lifespan, Magula said.
“I’m a mechanic more than I’m anything else and I think that any mechanic will tell you that buying a cheap bicycle is a false economy,” he added.
The Treasury on Friday said it did not speculate around changes to tax outside of fiscal events.
Both Magula and Parsons said they were most frustrated at the prospect of a salary sacrifice cap spoiling years of hard work in encouraging the take-up of cargo bikes.
Parsons said his company had seen cargo bikes make a difference in many parts of the UK, including a new store in Cornwall where the cycle to work scheme played an even more important role than in London.
Magula, meanwhile, said the scheme had played a vital role in the especially marked shift away from cars towards cycling over the past 15 years in London, where his company has both its branches.
“It is, I think, huge,” he said. “It’s part of a very complex exercise that has changed London.”
Additional reporting by Ramsay Hodgson
