Are they mad or just ignorant?

One has to ask whether anyone in this Government of ours understands anything about business and the importance of improving our woeful trade balance. Indeed do they even know there is such a thing?

Why the question? – Because I don’t understand why is it that this Government feels it needs to do everything to please ‘the consumer’ from Day 1. This is especially so when it sits on a huge majority guaranteeing its security for the whole of this Parliament. The Cabinet pays lip service to ‘growing the economy’ without any apparent understanding of what that means and how to do it! The reason for doing this is apparently to appease the Voters at the expense of doing what would be best for the economy.

This latest announcement that duty on imported Chinese e-bikes is to be dropped is a classic example of what I mean. –

Recently a government decision was announced to scrap tariffs on Chinese e-bikes coming into the UK.

This has been described as a “kick in the teeth for British manufacturing”. Border taxes were imposed on Chinese e-bikes following Brexit, keeping the UK in line with the EU, but the Business Secretary Jonathan Reynolds has accepted a recommendation to lift them on non-folding e-bikes.

UK-based companies have, however, called the decision “strange” saying it’s a blow at a “very scary time” for the industry. A typical example is James Metcalfe and his brother Lyle who run e-bike company Volt and have a factory in Milton Keynes.

They previously manufactured their bikes in China, before moving operations to a factory in Poland. They then shifting manufacturing to the UK following Brexit. “This is an odd decision, and a kick in the teeth for UK manufacturing,” Mr Metcalfe told the BBC.

“We brought our manufacturing here with assurances that this [tariffs on Chinese bikes] was a long-term change. We’ve invested a lot in it. We’re a small business, family-owned, and trying to do the right thing by building a quality product,” he said. “The UK was already a very competitively priced market for bikes. There was little need to bring in cheaper bikes from China,” he added. “What’s the benefit? I don’t see any. The government are saying there’ll be savings for the UK consumer. For years, however, we’ve been pushing government to put through alternative savings like grants and subsidies for customers.”

“Why not do what everyone else has done across Europe? Provide grants and invest in bike infrastructure in the UK,” he added. He also questioned why tariffs for folding e-bikes from China remained in place. The concern has to be that it will also be removed, which will seriously affect the competitive situation.

A government spokesperson said: “Defending UK industry from unfair competition is important. Thus we’ve taken the decision to continue protecting UK folding e-bike producers. At the same time we are lowering prices for consumers and importers of other products.” Are they serious??

The spokesperson added that the government was “continuing to take action on unsafe e-bikes”. It has recently launched a campaign “to raise awareness of the risks of dangerous e-bike batteries and scooters”. Surely most of the dangerous ones are cheap Chinese imports!

‘A scary time for the industry’

The UK bike industry has endured a tough few years following a boom during the Covid pandemic, which saw an increase in outdoor exercise and many people choosing cycling over public transport. Post-Covid sales dropped dramatically, and many companies were left with stock they struggled to shift. A number of companies struggled, including Mercian and Orange Mountain Bikes, or ceased production, such as Islabikes.

David Miall, who runs e-bike company Wisper Bikes, said UK firms had been heavily discounting in recent years to try and attract new customers. He said the latest move by the government, which he described as a “very strange decision”, would bring a “flood” of cheaper Chinese imports to an already overstocked market. “It’s a very scary time for the industry right now, and this will cause a lot of trouble for a lot of companies,” he said.

Mr Miall’s company designs its bikes in the UK but currently manufactures them in Taiwan and Portugal. He said he had already been contacted by Chinese bike manufacturers offering very low prices for their products. “They’ve overstocked too, and they now see the UK as a place to dump their bikes,” he said, adding that he may now consider focusing solely on fold up e-bikes.

“I think the government are thinking ‘Let’s give e-bikes a boost’ but this has been badly thought-through by people who don’t understand the industry,” he said (where have we heard that before?).

The Bicycle Association, which represents firms who make and sell standard and fold up bikes, said it was helping its members to respond to the new rules. “This is a significant decision and it may take some time for the implications for the UK cycle industry and its supply chains to become clear,” a spokesman said.

What is an e-bike?

Electric bikes – or ‘e-bikes’ – are an increasingly popular way to get around for hundreds of thousands of people in the UK.

The broad term ‘e-bike’ is commonly used for any electric-powered bike, but it can actually refer to very different types of equipment which are covered by different laws.

When most people think of an e-bike, they picture what is essentially a normal push bicycle with a small chargeable motor fitted to make it easier for the user to turn the pedals.

But there are also far more powerful electric-powered bikes on the market which are sometimes lumped in with e-bikes – for example, some models can hit 60mph and are designed for off-road riding in rugged terrain.

Conclusion

It’s not just me who’s doubting the sagacity of the Government. The Guardian reports that tax campaigners and retailers are urging the Government to address a significant tax loophole that allows Chinese companies to flood the market with cheap goods.

Paul Monaghan, chief executive of the Fair Tax Foundation, warned that the UK could see “a massive influx of even more Shein and Temu products” unless action is taken. Retail leaders, meanwhile, have emphasised the need for a level playing field to ensure fair competition. The current UK import duty threshold stands at £135, while items valued at £39 or less are exempt from VAT. The EU has said it is moving forward with plans to ditch its €150 threshold for import duty, and who knows what President Trump end up doing with the customs duty for goods entering the US from China.

Surely the priority is to growth the wealth-earning sectors of the economy which will then lead to that wealth being distributed to the population either directly via earnings or indirectly through improved services.

We should firstly be concentrating on supporting UK businesses and helping them to grow. Instead the Government says it will save the consumer £200 per imported bike.

One has to seriously question the decision of the Trade Remedies Authority, the body responsible for reviewing tariffs, whose stated reason for recommending the change was that allowing cheaper Chinese imports could save consumers £200! Totally ignoring the effect on the trade balance and the potential loss of UK businesses & jobs. Whilst the e-bike market is admittedly miniscule, it is the principle that matters and the lack of willingness to support British industry that is of major concern!!