Written by Dr. Noel Cass

The Guardian and the FT have both published responses to government hints that the £1,000 cap on the Cycle To Work (CTW) scheme might be reinstated. I argued in another Conversation article that financial incentives for 2-wheeled electric vehicles were already lagging far behind those for cars, taxis and vans, despite government figures showing that they have a far higher benefit to cost ratio. This is largely because the exercise from increased cycling pays back massively in health savings from a fitter population.

The government hints portray government ‘subsidy’ for more expensive bikes as unfairly benefitting more wealthy people who are using them for leisure: “tax breaks to high earners buying £4,000 e-bikes for weekend rides in the Surrey Hills. Taxpayers shouldn’t be footing the bill for luxury leisure.” This is politicising nonsense for numerous reasons.

The CTW scheme explicitly intends buyers to use their bikes for leisure and exercise as well as commuting. CTW anyway rewards wealthy people more than the lower-paid due to salary tax reduction. Poorer people who could benefit from the scheme (the out of work, minimum wage earners, self-employed and the retired) are anyway excluded, and any amount of increased cycling is a benefit for the nation as a whole in terms of decarbonisation of travel and the health cost savings. Finally, it is a strawman argument; HMRC themselves have found that just 6% of scheme users spent more than £2,000.

Thinking more broadly about transport policy and ‘tax breaks’, car business travel is often written off for tax purposes at two and a quarter times the rate of cycle use, through the HMRC’s Approved Mileage Allowance Payments scheme.  The £3,750 maximum grant available to buy an EV car represents a 10% discount on a vehicle for buyers, and the government has set aside £650m for this scheme. They do not apparently have any concerns that the people ‘exploiting’ this ‘hand-out’ might be higher-paid or using their new car for leisure trips that will not save the NHS money as they maintain sedentary car-dependent lifestyles. Why is the government subsidising effectively a discount service for car manufacturers, while threatening the uptake of the only government measure that helps increase bike sales, although retailers complain that they see very little profit at all from bikes they sell through the CTW scheme?

And why is the financial support for electric bikes rather than cars being threatened when bikes are so much more beneficial to riders and the places where they live? Research in Norway, where EVs are roughly 50% of the car fleet, shows that car mileages in EVs have actually gone up by 10-20%. EV cars’ air pollution is lessened by the removal of exhaust fumes, but this is now a tiny proportion of the air pollution caused by road vehicles. The particulates from tyre wear and braking are far higher, and increasing as car sizes continue to increase. Cars still take up urban space causing congestion and affecting land prices, even if they are electric. An electric velomobile can be 80 times more energy-efficient than the smallest EV car. Although regular e-bikes and e-cargo bikes are nowhere near as efficient as these sleek bullet e-bikes, their battery charging requirements are miniscule when compared to large and growing EV cars, costing pennies to charge while potentially easily replacing the ~60% of UK car trips that are under 5 miles. 

Others have pointed out that adapted bikes, e-bikes and e-cargo bikes are intrinsically more expensive than the £1000 cap would support, and these bikes can be crucial for the disabled, older people, and people with combined school-run-commute routines, as well as other family-based trips replacing car use. Our research on households offered a free month trial use of an e-cargo bike found that 11% of trips they made involved ‘trip-linking’ and 54% of trips (49% distance) carried children, while commuting, shopping and escorting children each made up 14% of trips. In total, around 50% of all trips and miles cycled using our e-cargo bikes replaces car use. The higher prices of these bikes meant that two-thirds of our relatively wealthy group of participating households felt that cost was still a major consideration when deciding whether to buy one, even after experiencing how useful they were in replacing second cars: a stated intention of 17% of the sample.

There are other, and arguably better ways of incentivising e-bike and e-cargo bike purchases. Other countries have provided grants rather than tax breaks, overcoming the high initial cost problem. Some have also made these means-tested, with the lowest paid receiving the highest possible grants or discounts. Research found that the lower-paid recipients saved far more carbon than those who received the smaller grants, replacing far more of their previously car-dependent trips. Compared to this approach, the CTW scheme is indeed regressive in principle. However, as the only current support for cycling, and for e-bikes and e-cargo bikes, it could be reformed and extended, or replaced with a progressive grant scheme, rather than being maintained but hobbled in the ways the rumours suggest.

Moving beyond cars and bikes, all holiday flights and private jet flights are ‘subsidised’ by a total lack of taxes on their fuel, benefiting the super-rich and frequent fliers who are correlated with the wealthier. Perhaps we could focus on the 3% of flights which account for 60% of air miles, releasing 70% of flight carbon emissions, involving billions of pounds of foregone tax revenue. The New Economic Foundation has highlighted that increases in flights do not mean more people are flying. Over the past 20 years, the number of Britons flying in a given year has gone down. Instead, there is a rise in frequent and ultra-frequent fliers. These people “take six or more return trips a year, and they are the biggest drivers of the UK’s growth in passenger numbers. Ultra-frequent flyers make up less than 3% of the UK population but take 30% of all journeys made by UK residents. Because of their rapid growth, we estimate that UK ultra-frequent flyers captured 39% of passenger growth over the past two decades”, and two-thirds of their flights are for leisure.

If the government want to politicise subsidy, let’s focus on the real carbon issues in transport: “Taxpayers shouldn’t be footing the bill for luxury leisure.”

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