The UK’s Cycle to Work Scheme is delivering a £573 million annual boost to the economy by helping millions of people switch to cycling, supporting retail jobs and improving workforce health and productivity, according to new research.
The analysis, commissioned by the Cycle to Work Alliance (C2WA) and released today, found that the government-backed initiative continues to be one of the most effective workplace schemes in operation.
The scheme lets employees buy a new bike and accessories through salary sacrifice, spreading the cost while saving on tax.
Stronger spending and healthier workers
In 2023/24, 199,000 employees used the scheme to purchase £219 million worth of bicycles and accessories, generating £43.8 million in VAT. The report said £8.3 million of that tax revenue would not have been collected without the scheme. Participation is expected to rise further, with 209,000 employees forecast to join in 2024/25.
Since its launch more than 25 years ago, over two million people have accessed a bike through the initiative. The research found that 38 percent of current users are new to commuting by bike, suggesting that the scheme continues to encourage lasting behaviour change.
Employees who cycle to work were estimated to save an average of £1,262 a year compared with driving, amounting to £41 million across participants. These savings, the report said, help households manage living costs while supporting local spending.
The study also estimated that employers benefit by £63 per worker in reduced sickness absence and a further £115 in productivity gains, amounting to £37 million a year for the wider economy.
Economic and environmental value
The findings indicated that the scheme provides a significant return to the economy by stimulating retail demand and improving workforce wellbeing. The C2WA, which represents the main providers of the scheme, said the results highlight its contribution to both business and environmental goals.
Steve Edgell, Chair of the Cycle to Work Alliance, said the figures demonstrated how public policy could deliver measurable economic and social returns.
“The Cycle to Work Scheme is proof that smart policy pays back,” he said. “The benefits are tangible: commuters save over £1,200 a year, employers gaining from healthier and more productive staff and communities enjoying cleaner air and less congestion.
“Crucially, it changes behaviour, with almost 40% of participants new to commuting by bike. The case is overwhelming – the scheme is proving its worth for businesses, communities and the wider economy and should be expanded so even more people can benefit from its rewards.”
The research, conducted by consultancy firm Ortus, found that the scheme not only reduces costs for individuals but also strengthens the UK cycling industry, which has faced a challenging retail environment in recent years.
Government support for active travel
Local Transport Minister Lilian Greenwood said the findings showed the value of encouraging people to adopt active travel. “The Cycle to Work Scheme has been a real success story, helping millions of people choose a healthier, greener way to travel while boosting local economies and supporting jobs,” she said.
“This new research shows just how powerful active travel can be, and that’s why this Government is investing £616m over the next four years, to help make walking and cycling a safer and easier way to get around, wherever you live and help grow the economy, so we can deliver our Plan for Change.”
Calls to widen access
To mark its 25th anniversary in 2024, the Cycle to Work Alliance published a manifesto urging the government to widen access to the scheme, particularly for lower earners and self-employed workers. It argued that expanding eligibility could amplify the scheme’s social and environmental benefits, supporting greater inclusion in sustainable transport.
The C2WA said the findings showed the scheme’s value extended beyond cycling infrastructure and retail spending, describing it as an engine for economic growth and healthier living.
According to the alliance, the £573 million annual benefit includes direct spending on bikes and accessories, productivity gains from healthier workers and the broader economic impact of reduced absenteeism and household savings.
Supporters said the figures underline the importance of retaining tax incentives and employer participation in the scheme at a time when businesses are seeking to balance cost control with wellbeing initiatives.
With growing emphasis on sustainability and the transition to net zero, the research suggested that promoting active travel through workplace schemes remains a cost-effective way to improve both economic and health outcomes.
