Business and cycling groups have urged the government to reform its cycle to work scheme so it can be used by less-paid and self-employed workers, arguing that they are often the people who need it the most.
The scheme was introduced in 20 years ago and has been used by more than a million people since it allows users to pay for a bicycle and accessories in instalments taken from their salary on a tax-free basis, saving them between 25% and 40%.
But longstanding rules mean it is not available to people earning minimum wage, or close to it, or who don't pay tax on a pay-as-you-earn salaried basis.
In a letter sent on Monday to the chancellor, Rishi Sunak, groups including the Federation of Small Businesses, the Co-op and British Cycling called for this to be changed, arguing that those on lower incomes need to save money on travel because of rising prices.
The letter says that the least well paid in communities are feeling the effects of soaring inflation more than those on higher wages, with the rising cost of commuting only adding to their concern, the rising cost of commuting.
They have no choice but to commute to a place of work because they have no option to do their job from home. The Cycle to Work scheme could provide equitable access to cycling and provide a cost-effective solution for many workers in this group. We believe that those on the lowest incomes should benefit from the scheme, as it is a proven method to get more people cycling. More than 13% of the UK labour market was expected to grow, and was unfairly excluded, the letter added.
Data collected by the Cycle to Work Alliance shows that it's become more in demand because of the changing travel patterns during the Covid crisis, particularly for key workers, as well as the five biggest bike providers under the scheme, including Halfords and Evans Cycles.
Between March and September 2020, alliance members recorded a 60% increase in use of the scheme compared to the same period in 2019 with even steeper increases for staff from the London ambulance service and Metropolitan police.
The letter argued that expanding the scope of the scheme would help deliver the government's commitment to get more people cycling and to prevent post-Covid travel patterns from becoming more car-dominated.
Even if a switch to bike commuting might mean a net saving, the scheme doesn't allow people to sign up if the contributions from their salary for the bike would take them below the minimum wage.
The alliance pledged that if the change were made, retailers would make sure they had calculated the cost and told if their net salary would now be below the minimum wage.
The change is supported by Labour. There is no path to net-zero without green transport, and it is important that ministers do more to encourage people to work, increase access and take up of this popular scheme, according to Gill Furniss, the shadow roads minister. The health wellbeing manager at the Co-op group, Paul Caudwell, said it was wrong that lower-paid staff were denied access to the scheme. I believe that the legislation must change to allow a salary sacrifice arrangement to be able to reduce pay below the national minimum wage. It would make the incentives for using a salary sacrifice scheme more equitable for all of our colleagues and increase the take-up of our cycle to work scheme.