BDA launches petition for reform of Cycle to Work sector

The Bicycle Dealers Association (BDA) has launched a petition for reform of the Cycle to Work sector.

“We are a group of bicycle dealers, and we are challenging how the administration involved in the Government’s Cycle to Work is currently structured,” said the petition. “We have tried, over an extended period, to positively engage with the bicycle industry, to discuss a more rational and fairer system. This, to date, has been an unsuccessful process – there seems to be resistance to change because of vested interests predicated on a history of excess profits within the Cycle to Work administration sector. In essence, we feel this is a failure of appropriate governance of the sector.

“The reason the sector is configured in this unfair way is because bicycle retailers were not represented when the scheme was devised or as it has been reformed over the years. This must never happen again.”

The BDA said the costs associated with administering the scheme are largely the same if the bike is £500 or £5,000, but Cycle to Work providers levy a percentage on the whole transaction – typically 5 to 15%. “This is unfair and leads to excess profits,” it said. “The Cycle to Work providers levy a charge on solely upon the retailer – whose bicycle and accessory margins are typically between 25-35%. This is a financially unsustainable model.”

The association said it is committed to working with all parties to achieve a “fairer and more sustainable model for all stakeholders” – UK taxpayers, consumers, bicycle-retailers, Cycle to Work providers and the UK bicycle industry. “We suggest a more balanced scheme, where retailers, manufacturers and the UK cycle industry share the financial burden, based on reduced or capped fees, that benefits from structured Government oversight. We would further suggest that a proportion of the fees contributes to cycling advocacy and sustainable transport initiatives. We look forward to positively negotiating with all stakeholders on this basis,” it said.

“We invite like-minded bicycle retailers to join us in the earnest struggle for a fairer Cycle to Work marketplace, with appropriate oversight,” the petition concluded.

The BDA was formed earlier this year to challenge how the administration involved in the Government’s Cycle to Work scheme is structured. In September, Cyclescheme announced a reduction in retailer commission rates. Effective from 28th September, on any unredeemed e-certificate, Cyclescheme commission was reduced to 8.33%, excluding VAT, for all bikes, accessories and helmets. From the beginning of November, a commission cap was introduced on Cyclescheme e-certificates above £3,000 RRP, meaning 0% commission will be paid above this cap.

Cyclescheme had previously been working in partnership with bike brands and retailers to review its commission rates, including Giant, Raleigh, Trek and Specialized, impartially facilitated by the BA. The discussions focused on “how to build trust and support for the scheme, and how to fairly reflect the value and costs in the commission structure”.

However, the BDA said it did not believe that bike shops were “adequately represented” in the negotiation of the new commission structure. “Meetings with bike brands and the BA have not included representation from bike shops that have been paying for the scheme,” said a statement, “And it appears will continue to do so. There is no acknowledgement of the fundamental flaws in the current Cycle to Work operation, including the hard to justify end of agreement costs for consumers.”

The petition can be viewed here.

Read the November issue of BikeBiz below: