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@Aroogah
Seriously, after reading that long response - quite a lot of it is easy to argue I think. In a nutshell...
The recovery of money/bike is easy - they manage payroll (or very likely outsource it) so that is easy enough to recover funds and to ensure that payments are being made.
Insurance - draft an internal policy on the use of the scheme that requires employees to get it and by signing it you release them of liability if you don't have the insurance
Riding to work - make that a pledge as part of the signed policy above
Breakfast - are you f**king kidding me?
No benefits to the company? It's about benefits to the employees. You are dealing with the wrong person.
Send the arguments to Cyclescheme and see if they can help out.