The case for cycling: the economy

By Cherry

Cycling and cyclists make a significant contribution to the economy

Investing in active travel is a remarkably good deal. The yields are high and it’s a boon for public health, the national and local economy, high streets, retailers, jobs, the rural economy and tourism.

Cycling's contribution to the economy is significant, and the evidence is substantial and growing.

Given this, we’ve featured some highlights below, but also attach a briefing citing many other, older studies (see link to pdf at the bottom of this page).

Also, for more on the numerous benefits of investing in cycle infrastructure, economic and beyond, see Cycling UK’s Getting there with cycling.

A high return on investment

For every £1 invested, walking and cycling return an average of around £5-6 [1]. A ‘benefit to cost ratio’ (BCR) greater than or equal to 4 is considered to be ‘very high’ value for money.[2] Putting this in some context, the predicted BCR for the HS2 (high speed railway) wasn’t nearly so impressive at about £2.30 for every £1 invested.[3]

Transport appraisal: proposed highway and public transport ‘interventions’ that need Government approval must be assessed for value for money and impact. It is also best practice to do the same for schemes that don’t require approval. For more on the ‘transport appraisal’ process, please see note at the bottom of this page.

A cost-effective health intervention

Active travel helps keep people fit and guards against ill-health, so saves the NHS money:

The economic value of cycling’s health benefits in the UK was estimated to be £1,056,598,000 in 2015 (it’s probably more than that now). [4]
A study of New York concluded that, in terms of health: “Investments in bike lanes are more cost-effective than the majority of preventive approaches used today.”[5]

Please see our briefing on health for more.

Boosts high streets, towns and shopping areas

Although local businesses and communities may be worried about the economic impact of schemes that encourage people to cycle or walk rather than drive to town centres and high streets etc, they need not be:

A compact town optimised for walking and cycling can have a “retail density” (spend per square metre) 2.5 times higher than a typical urban centre; and cycle parking delivers five times higher retail spend per square metre than the same area of car parking.[6]
A survey in London found that: “Overwhelmingly BIDs [Business Improvement Districts] rated an appealing environment for spending time in, walking, and cycling, as either very important or moderately important for business performance. Specifically, 95 per cent of BIDs said that a good environment for walking was important to business performance, 85 per cent for cycling”.[7]
Traders in Jesmond, Newcastle, were worried by plans to convert Acorn Road, a shopping street, from a two-way to a one-way street, with two-way cycling and the loss of 20 car parking spaces. Once the scheme materialised, however, they warmed to the idea, with one shop owner saying: “It’s actually better now than before. […] People on bikes are just as likely to buy as people in cars. They maybe won’t buy as much but they might come back later.”[8]

Creates jobs

The TUC has estimated that, along with energy efficient upgrades and reforestation, building cycle lanes and pedestrianisation comes top for immediate job creation (direct and supply chain jobs) per £1 million investment.[9]
If cycling in London grew from 3% of all trips to the levels seen in Copenhagen (c26%), it could potentially create an extra 46,799 cycling-related jobs.[10]
Compared to other sectors, cycling could offer more local jobs, more jobs for lower skilled workers and more jobs per unit of investment.[11]

The cycle trade brings in money

A report published in 2021 estimated that, in Greater London, where cycling is particularly popular: [16]

The sales value of cycling products and services came to £100 million+
Turnover from bike and cycling products manufactured in the city was around £160 million
Combined, the bike manufacturing and retail industry contributed over £90 million in Gross Value Added (GVA) to the London economy in 2020.

Good for the tourist. leisure and rural economy

As a leisure activity, cycling contributes to the tourist and rural economy:

Recent data from Cycling UK’s King Alfred’s Way route in southern England show that riders spend an average of £83.60 per day on accommodation, food and drink.[12] Indeed, many local businesses along this 218-mile (350 km) loop have embraced the boost in passing trade.
A 2015 report estimated that cycling and mountain-biking contributed about £520m to British tourism every year.[13]
A study published in 2016 valued cycle tourism in EU countries at €44 billion a year. [14]

For more, see Cycling UK’s report the Economic benefits of cycle tourism (2020).

Adding it all up

With active travel offering so many different benefits for the economy, adding them all up makes the business case for investment decidedly strong:

An estimation of the value of the cycling sector to the British economy, published in 2018, says: “Drawing on the existing literature, and making some broad provisional calculations from this data, we estimate that cycling contributes around £5.4 billion a year to the economy, with the larger share of this, £4.1b, coming from wider impacts, particularly reductions in loss of life, and reduced pollution and congestion. Products associated with the cycling industry contribute £0.7b, while tourism attributable to cycling contributes, at least, a further £0.5b. Cycling generates around 64,000 FTE jobs in the UK including jobs in tourism, sales and repair, cycle delivery, manufacturing, and cycle infrastructure.” The authors state that these were minimum estimates.[15]
A Greater London study looking at the economic benefits of local cycling investment found: “Combined with the wider benefits of improved health, reduced congestion, reduced absenteeism (and increased productivity), and reductions in greenhouse gas and pollution emissions, the economic benefits of cycling in London at 2020 levels are conservatively estimated at over £1.3-£1.4 billion.”[16]

Costs of car-dependency and ‘transport harm’

Over-reliance on cars, on the other hand, imposes significant economic costs on society, our health services and individuals. Some of these costs are obvious, while others – usually the ‘external’ costs – are virtually hidden.

Costs include:

Congestion – a serious issue for business, affecting journey times for employees and goods distribution. It’s also a burden for individual drivers: an average debit of £595 per UK driver in 2021, despite there being fewer vehicles on the road thanks to the pandemic.[17] In 2019 (a more ‘normal’ year), congestion cost the UK £6.9bn.[18]

Note that, contrary to some assertions, experience in both London and New York show that cycle lanes, once built, don’t cause congestion and, moreover, are a highly efficient use of road space.[19]

Road casualties – in Great Britain, these cost more than £2.1 million per fatality, and about £270k per seriously injured casualty.[20]
Physical inactivity and the associated ill-health – the NHS spends billions treating this – c.£7.4 billion in 2014. [21]
Pollution – in terms health and social care, air pollution in England cost about £43m in 2017.[22] (Pollution also damages buildings, ecosystems and agriculture).

Also:

Road building schemes – bypasses, widening, upgrades to motorway standards etc. – have repeatedly failed to live up to their economic promise.[23]
In 2022, a report commissioned by Cycling UK reckoned that the £2.4bn it cost the UK government to cut fuel duty by 5p per litre (2022-2023), could have paid for:

- 1,775 play streets

- 57 km of flagship walking infrastructure

- 1,165 km of walking infrastructure upgrades

- 527 km of separated cycling infrastructure

- 61 walking and cycling bridges

- 18 large mobility hubs with 90,000 cycle parking spaces_ 1,210 in street mobility hubs

Had the money been spent this way instead, it would “generate an estimated 68 billion zero carbon walking and cycling kilometres during a 35-year infrastructure lifespan compared to the 27 billion."[24]

A note on transport appraisal

As mentioned, proposed highway and public transport ‘interventions’ that need Government approval/funding must be assessed for value for money and impact, while it is best practice to do the same for schemes that don’t require approval.

The complex mechanisms and techniques involved, though, have often been heavily criticised for bias towards large-scale road building or expansion projects, alongside their propensity to undervalue small-scale schemes that typically cater for active travel, despite the latter’s potential to improve lives.

Progressive revisions have partially addressed this imbalance, e.g. with the inclusion of the World Health Organisation’s HEAT (Health Equity Assessment Tool) in the DfT’s appraisal guidance, helping to calculate and factor in how much cycling and walking save from reductions in mortality.

One persistent flaw, however, lies in the way that the process values the impact that a scheme may have on journey times. This is because it aggregates any time savings that individuals are likely to make and puts a high nominal value on the result. However, the time saved by each individual driver may well be no more than a few minutes and, to all intents and purposes, of little if any real benefit in economic terms.

Thus, the weight given to shorter journey times in the appraisal process is disproportionate, but is all too often a decisive factor when approval is given to road schemes.

Another problem is the paradoxical assumption that if people spend time and money on travelling, they must be gaining an economic benefit which outweighs the costs involved – otherwise they wouldn’t make the journey. Consequently, measures that enable people to replace longer car trips with shorter cycling trips are assumed to represent an economic disbenefit, even though (or, more likely because) this saves them time and money!

Cycling UK believes that more research needs to be carried out into making sure that transport appraisal puts a fair and accurate value on providing for active travel, and that other factors such as quality of life and well-being are given the weight they deserve.

Guidance on the transport appraisal process differs among UK nations: