The cycle industry – a green growth sector that can help deliver net zero

Politicians of all stripes want to grow the economy and jobs.

One sector which packs a surprisingly large punch in terms of its contribution to this is the cycle industry. A recently published report I authored for the Bicycle Association estimates that the cycle industry (retail, wholesale and manufacturing) generates around £1.2 billion a year in direct economic benefits and tax for the UK economy and supports over 23,000 green jobs.

This is a significant proportion of the official estimate of 400,000 jobs in low carbon businesses.

Combined with direct jobs in the cycle industry, cycling in the UK currently supports around 64,000-69,000 jobs, more than the steel industry.

These jobs are varied and range from the highly skilled and technical (e.g. bike design) through to sales, training, administration, events, construction and bike delivery/logistics. Many of these jobs will be provided by small businesses and local retailers, helping support high streets and the local economy, and they are spread all over the country.

If you add in the economic benefits associated with cycling tourism, and construction of cycle infrastructure plus the wider benefits associated with cycling such as improved health, reduced congestion, reduced absenteeism and reductions in greenhouse gases and pollutant emissions then the total benefits of cycling in the UK are an estimated £7.5 billion in economic value a year.

This is equivalent to around £1,800 per year for each adult cyclist.

And cycling supports businesses in many other ways, that are often overlooked in conventional economic appraisal.

For example there is evidence that improving cycling and walking infrastructure in retail areas can increase spending in existing shops by up to 30%. A 2018 study found an increase in cycling trips in Greater London significantly contributed to the emergence of new local shops and businesses.

Improved cycling conditions in large cities can also increase productivity through agglomeration benefits (discussed in a previous column) by supporting more compact development and enabling more people to get in and out of the city centre.

For example Dublin’s Bikeshare scheme was estimated to provide agglomeration benefits of up to 6.7 million Euros.

But if the economic and employment benefits are large today, there is even greater growth potential in future years, driven by the need to reach net zero.

The report estimates the levels of cycling needed in the UK to be on track for net zero by 2030. This assumes a shift in some of the car mileage for trips of 2-10 miles that are of cyclable length. A nearly five-fold increase in cycle trips for travel across the UK could make a significant contribution towards reducing car mileage.

This level of cycling, still modest by international standards, would be a cost-effective contribution towards achieving our carbon targets.

And if these higher levels of cycling are achieved it will bring enormous green dividends of the order of £75-149 billion per year by 2030. This includes £1.5-2 billion in direct output from the cycle industry, with sales of bikes and bike products and associated Gross Value Added likely to increase by 60-130%. These figures likely underestimate the potential for growth in e-bike and e-cargo bike sales, which are a fast-growing part of the market.

In 2021 only 6% of bikes sold in the UK were e-bikes, compared to the Netherlands where they accounted for over 50% of all bikes sold.

These figures also don’t take account of the potential from reshoring manufacturing capacity from overseas, with only 3% of bikes currently sold in the UK manufactured here. Contrast this with Portugal which produces one quarter of Europe’s cycles.

It is estimated that every 1,000 bicycles reshored/produced each year creates three to five skilled jobs, or between six and nine skilled jobs if those bikes are e-bikes. If only a fraction of the UK’s bike market could be reshored this would create thousands of high value jobs.

Steve Garidis, executive director of the Bicycle Association has commented that: “It is time for the Government to recognise the value, opportunities, and needs of the cycle industry, as well as the role we can play in ensuring the UK meets its net zero and economic growth ambitions.

“We are a strategic British industry, with infinite potential to deliver economic, social, and environmental benefits as demonstrated through this report, and we hope that these promising findings encourage Government to work with us to boost cycling business and broaden cycling uptake.

The cycle industry is clearly a key green growth sector. But to reap these future economic benefits and green jobs the UK government will need to support the cycle industry directly and indirectly.

For example it can provide more funding for grants to drive demand for e-bikes and e-cargo bikes to replace car and van trips.

The Skidmore Review cites the example of the French Government scheme which provides residents (with priority for low income urban groups) with grants of up to 4,000 Euros (over £3,500) for trading in an old car and purchasing a bike or e-bike instead.

Garidis commented that “It is high time that the Government put in place long term consistent funding and policies to stimulate demand, in particular for electric cycles, which have the potential to be game changing for the environment, health and the UK economy.”

The Government can also fund innovation in the UK’s bike industry to grow the UK’s capacity and market share. The Government has provided hundreds of millions of pounds of funding to support ultra-low emission automotive technologies but their innovation funding service does not even list cycling as a sector.

There needs to be greater government recognition that cycling is also part of the solution for cleaner road transport and decarbonisation.

There also needs to be more funding and courses/apprenticeships for the cycle industry to support current and future skills requirements, and action to reduce inequalities in access to education and training. A more inclusive sector is generally a stronger, better performing sector.

Underlying all this is the strategic necessity of growing cycling to deliver carbon targets and other government policy aims.

This needs binding targets for traffic and carbon reduction at all levels of government, combined with more investment in cycling and other sustainable modes to ensure there are alternatives to driving. This will need increased and sustained investment in high quality walking and cycling infrastructure, both in urban areas as well as long distance routes linking settlements. We need to make cycling conditions safe to encourage more people, particularly women, to cycle.

The annual benefit of £74-£149 billion a year by 2030 from increased cycling is likely to be substantially larger than the cost of constructing a comprehensive cycle network across the UK.

For example Active Travel England estimates that £18 billion will be needed to deliver the infrastructure for an England cycling masterplan by 2030. And for every £1 spent on cycle infrastructure the DfT estimates that there is £5.50 worth of social benefits.

Investing in the cycle industry and cycling is an investment that is good for business, good for the UK economy and good for the health of people and the planet.