Does this rule only apply to non electric donor bikes? Seems silly if that’s the case!
Silly is what happens when laws are modified with insufficient due consideration.
The stumbling block here is the difference between Type Approval and Single Vehicle approval.
Under EU pedelec law, also now UK law as ruled by the Great Repeal Bill, bureacracy free pedelecs are only permitted on the roads if power ceases when pedalling stops. That allows them, via an exemption (h) in the type approval legislation, to be not considered as motor vehicles.
If power does not cease when pedalling stops, they are motor vehicles with all that implies, including that they have to be Type Approved AS MOTOR VEHICLES.
But type approval only applies for manufactured complete machines. Any individual machine not type approved or which is assembled in some way can get a Single Vehicle Approval to be used on the roads. However, nowhere in any of the regulations is there an exemption for Single Vehicle Approval pedelecs to remain pedelecs, so a strict interpretation is that they are not allowed on the roads as bicycles, even if all the other provisions for a pedelec including power cutting out when pedalling stops are met. i.e. All kit bikes are illegal.
A less strict interpretation is that, in the spirit of the law, Single Vehicle Approval is the same as having type approval. However, that in turn means the pedelec will still be a motor vehicle in law if power doesn't cut when pedalling stops.
The DfT have taken that less strict interpretation and extended it by saying they will consider single approved pedelecs with full throttles to be not motor vehicles but bicycles. However, therein lies the impasse. The looser interpretation they have assumed also insists that such machines
are motor vehicles since it says Single Vehicle is the same as Type Approval, so any pedelec with fully acting throttle remains a motor vehicle with no exemption in law.
So the provision you are using is only a Ministerial order permitting an illegal use, a form of local allowance only. Indeed when applying for a single vehicle approval the Guidance Notes title says as much:
GUIDANCE NOTES FOR COMPLETING AN APPLICATION FOR A MINISTER’S APPROVAL CERTIFICATE (MSVA 1)
It is similar to the Ministerial Order that Paul Boateng made as Home Secretary when he gave permission for cyclists to use the pavement when in genuine fear of the traffic on certain occasions. That is still illegal, merely exempt from prosecution if fulfilling the Minister's conditions.
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