A SCHEME to encourage thousands of council staff to pedal to work on cutprice, tax-free bikes has been scrapped by Hampshire County Council in a blow to its green credentials.

Council chiefs pledged to bring in the Cycle to Work scheme, which would have offered staff a saving of up to 50 per cent on the cost of bicycles and equipment worth up to £1,000.

But council leader Ken Thorn-ber, who is battling a £53m budget hole, has ripped up earlier commitments by his environment boss and after further investigations declared it unaffordable.

He said: “The costs and res-ources associated with putting in place solutions to ensure all staff could be eligible for the scheme were significant and we do not have the budget to support this. In today’s economic climate the provision of tax free benefits is not appropriate.”

The move has angered eco minded council staff.

Amy White, a deputy headteacher, said she was “disgusted” by the decision.

“I am so annoyed and in such disbelief that especially in this time with the economic climate and with sustainability being of such importance that [he] has dismissed such an important scheme.”

She added: “It clearly would not be difficult for an organisation of Hampshire’s size to implement and manage such a scheme. The majority of the work to implement such a scheme had already been completed internally.”

Matt Ruston, another council worker who hoped to sign up, added: “I feel it is vital that organisations such as Hampshire County Council offer incentives to employees that decide to do something about climate change.”

Eastleigh and Winchester councils have run the scheme for years. Southampton City Council brought it in last year after years of delay. More than 100 of its staff have now signed up.

Lindsi Bluemel from Southampton Cycling Campaign, who has used the scheme, said: “It does put Hampshire County Council in a bad light and dents any environmental credentials they would be aspiring to.“I don’t understand it.

The cost falls mainly on the Government.

“It’s very disappointing as other councils and large firms seem to be able to manage it. It also encourages people to cycle rather than drive, which has benefits for every taxpayer.”

The Government scheme allows employers to pay for the bikes up front and hire them back to workers tax free, minus VAT.

Monthly payments are deducted before tax and national insurance resulting in a saving of up to 50 per cent on the retail price of the bikes.

However, new rules on the second hand valuation of the bikes have reduced the total saving if staff decided to buy their bike after the hire period. Under the scheme the bikes must be used “mainly for commuting to work”.

Southampton City Council said it was down to line mangers to vet usage and admitted applications for the scheme had been refused.

A spokesman said: “We are confident our staff use the bikes for the right purposes.”

How the scheme works

• Under the Cycle To Work scheme a new bike and safety accessories, worth up to £1,000, are purchased upfront by an employer and then leased to the employee over a fixed term, usually 12 or 18 months

• Employees pay for the hire in instalments taken from their salary before tax.

Typical savings on the full retail price are between 40 and 50 per cent.

• At the end of the scheme the employee can buy the bike at “fair market value”, its second-hand price.

• This was previously five per cent but recent Government guidelines have raised it to between 7 and 25 per cent for a bike over £500, depending on its age, or between 3 and 18 per cent for a cheaper bike.

• More than 400,000 people nationwide have taken advantage of the scheme since it started more than ten years ago.