How many of these bikes are actually used for commuting, I wonder?
I stuck to the rules within the first year of ownership of my Wilier. Back then (2009) it was something along the lines of "the majority of use of the bicycle must be for commuting".
If I used it for
n non-commute rides, I made sure I used it for
n+1 commutes. If they measured it by distance or total time I would have been in trouble as every single one of the non-commute rides was way longer than my 12km commute, as they included rides like the Snowdon & Coast 400km Audax, and the Kernow & SW 600km Audax.
(We also had a £1500 limit rather than the standard £1000 limit, and I negotiated buying a discounted "last year" bike too [by paying a bit more than the discounted cash price to cover the scheme costs], and paid the extra with a credit card [which was also verboten I believe].)
Regardless of how I (ab)used the scheme, it's great for people that do make the transition from a train/car/whatever commute to a regular bike commute because they now have a sensible commuting bike with the cost spread over the year (the discount is a slight bonus). I know some people who felt trapped by their annual train season ticket and the fact that they could spread the cost of that over the year via a loan from their employer.
As has been said before, the Government should just get rid of VAT on bikes (and bike related accessories) and then they can simplify things by binning the scheme although that does cut off access for people who can't afford the up-front cost (a loan system like the season ticket loan doesn't work so well as the bike can't be sold for a proportional refund like a season ticket can be.)