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Motability Select Committee Report

Posted in General News on Tuesday, May 22nd, 2018

The First Joint Report of the Work and Pensions and Treasury Committees into the Motability Scheme was released on the 21st May 2018 and stated that Motability “badly needs a new road map” for its finances. Below is a summary of the report

MPs have criticised the independence of the organisation. Motability the charity does not put the administration of the scheme out to competitive tender and Motability Operations donates its surplus reserves back to the charity. The third entity ‘Motability Tenth Anniversary Trust’ also shares its Chairman with Motability the charity so cannot be deemed an independent body.

Motability Operations receive two tax breaks from government. It does not pay VAT on the vehicles and it is exempt from Insurance Premium Tax which comes to a saving of £700 million per year. Motability Operations does not have to competitively tender from the exemptions.  For the Government to provide tax reliefs to one company alone, especially without requiring the company to competitively tender for such reliefs, makes it, in effect, a monopoly supplier sustained by public money. MPs have asked The Department for Work and Pensions to explain why providing such state assistance in the absence of competition is an appropriate use of public money.

The report states that reserves held by the Motability Operations are far too high in relation to risk the company face and it believes if the reserves were used appropriately they could make prices lower for customers or increase their charity donations.

Four retails banks own Motability Operations which have been making considerable profits of £700,000 per year. It does not sit comfortably with the committee that at times of pressures on the welfare budget the banks have been making these profits from a risk free charitable scheme.

In terms of executive pay the committee does not agree with Motability that they should have comparable executive pay to a FTSE 250 company as it does not face the same risks or stresses of such companies. The report states that: “Motability Operations exists in a state-sponsored monopoly”. With its tax exemptions the scheme can be much cheaper than other car leasing schemes so it will never struggle to attract customers, it does not have to compete for its contract, there are no shareholder pressures and it is not a credit risk as it runs on government payments.

The Committees, the Department for Work and Pensions, and Motability are all in agreement that a National Audit Office-led value for money inquiry into the Motability Scheme and the organisations running it should be carried out. The Committees recommend that DWP ask the NAO to carry out a review under s6(3)d of the National Audit Act 1983.

Commenting on the Report, Rt Hon. Frank Field MP, Chair of the Work and Pensions Committee, said: "It is impossible to calculate the human happiness that has resulted from the freedom and independence that Motability scheme—the first and only scheme of its kind—offers disabled people. 

But the organisation operates as a monopoly that faces no competition in accessing disabled people’s often hard-won PIP benefits.

The levels of pay pocketed by its executives and the cash reserves it is hoarding are totally out of whack with reality of its position in the market. That one member of staff is paid over ten times what the Prime Minister earns, is one example of where Motability needs to get a grip of itself and realise the privileged position in which it trades.

Its executives must co-operate with a full NAO investigation into the value it is offering the taxpayers who fund a significant chunk of its operations."

Joint statement from Motability and Motability Operations: “We note today’s (21st May 2018) Work and Pensions and Treasury Committees’ report into the Motability Scheme. We welcome that the report recognises that the Scheme ‘provides an extremely valuable service to disabled people’ and one that has helped ‘millions of disabled people… have their lives greatly enhanced’. 

“This reflects our priorities of always providing outstanding customer service, value for money, sustainability, and putting disabled people and their families on the road to freedom.

“The National Audit Office will now look at the Scheme - something Motability the charity, and Motability Operations had made clear they would welcome before the Select Committees began their inquiry.

“In line with Lord Sterling’s statement to the Joint Committee inquiry on 5 March, he wrote to the Committee Chairs on Thursday 17 May, confirming our agreement to a review under s6(3)(d) of the National Audit Act 1983 (see attached). We look forward to engaging with the NAO as it conducts its review.”

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NIGEL BLAIR's Gravatar

Tuesday, May, 22nd, 2018

As a result from reading the contents off the report it should now be that the only time mobility customers should be asked to pay an advance payment on their car should be when they initially sign up as a new customer meaning that when their car is replaced every three years they would have no further advance payments to make as at times the advance payments can be very costly causing financial hardship for the customers, looking at the huge Monterey reserves which have been built up over the years they could well afford to make it easier for customers as the total Mobility rate in the pip monthly payment is given over to mobility which can result in the payments Far exceeding all of the costs which mobility pay out over the three year lease that the customer has signed up to, I trust that the above report will be acted upon as soon as rather than many years down the line

Richard C's Gravatar
Richard C

Tuesday, May, 22nd, 2018

I struggle to get suitable vehicles with the large deposit needed, hope this change quick, as current vehicle is painful to drive, I also suggest, that an option to spread paying the AP be considered, or even spread over the amount of mileage, ie... possibly at each service or other interval, set up regular payments depending on mileage done, also affecting future resale value. Also more options to purchase after 3 years, including insurance, and options for servicing. To be able to negotiate with dealers as anyone could when buying new cars. I would actually like to buy a commercial vehicle, ie 5 seater pick up, at similar prices, and vans, where being higher up and more headroom suits me, lots of times we have needed to buy furniture, where someone could load and unload, or even disabled equipment.. there are all sorts of options,

Robert's Gravatar

Tuesday, May, 22nd, 2018

I yotally agree with the comment by Nigel that the advance payments should be totally scrapped as not everyone can afford these and some of them are extortionate.

Andy Allies's Gravatar
Andy Allies

Friday, May, 25th, 2018

If the CEO's salary is cut to the level of the Prime Minister, we could end up with a complete idiot in charge of Motability as well as the Government. There is an old and wise saying: 'If it ain't broke, don't fix it'. The scheme runs and works. It's not perfect but it works.

miss pat's Gravatar
miss pat

Friday, June, 1st, 2018

I agree with comments below also why is it when there are 2payments in one month no one gets them when it's only monthly payment for car not 2payments can someone explain that thankyou

Ellen McQueen's Gravatar
Ellen McQueen

Friday, June, 1st, 2018

I agree with Nigel Blair. I often find that the advance payment just means I cannot get that vehicle I would prefer because of the cost . An overhaul of scheme sounds good ?

John's Gravatar

Friday, June, 1st, 2018

Agree with Andy - if it ain't broke... I see big problems where a stable and functional service gets tendered out competitively and the tendering process does not take into consideration the finer details which cause friction between departments and customers, not to mention the anxiety of knowing your employees will be doing the same job for less money working for a new company... There are changes that need to happen to the scheme, but i have never heard a bad word about Motability the organisation.

Lisa knight's Gravatar
Lisa knight

Friday, June, 1st, 2018

I agree with nigels comments, its taken me 4 years of battling every year, to finally win full mobility allowance only to realise that the only cars suitable for my disability require deposits in excess of £1500. This caused me great financial distress to aquire this. Scrap the deposits considering the huge monetery reserves.

David's Gravatar

Friday, June, 1st, 2018

I fear this is just another means of targeting reductions to government funding for disabled persons. There are some valid points made in the article like why should the chief exec be paid 10x that if the prime minister. But then again the prime minister had a lot of other fre things during their tenure that are not included in the overall remuneration package. So let’s hope that the NAO compares apples with apples, personally I don’t think they will. And should the banks make those levels of profit? I do t think so, recover their costs, yes with maybe a fixed sum profit. Many other commercial company have a community involvement commitment, so why can’t these banks operate this scheme in that way? Maybe the problem lies in the fact that the scheme was set up in 1970s and may not have been changed since? However I also have reservations about any future schemes that are based on solely a competitive price basis. As someone whose son drives a Wheelchair Accessible Vehicle (WAV) i can foresee issues with solely a competitive cost run business that may not be “tasked with providing a suitable driving solution”. This scheme cannot be compared directly with a commercial vehicle leasing scheme as a percentage of the solutions are extremely personalised. Yes the majority of Motability vehicles do not have any modifications, these could become competitive tender with other lease schemes, provided that the savings are reinvested to fund the more complex adaptations like drive from wheelchair WAVs, like my sons and others drive.

Dean Collyer's Gravatar
Dean Collyer

Friday, June, 1st, 2018

I generally struggle to save up the advanced payment, as I need a vehicle large enough to take my powered wheelchair ( which I have to purchase & maintain myself ) and I also need an automatic, which always seem to require a much larger AP than their manual versions. But I don’t see things changing anytime soon. I do have to say in defence of motability, without their scheme, I would be stuck at home unless my wife was off work and could take me out. Since getting my first motability car a few years ago , I feel much better in myself , being more independent.

mr ainsley c tidd's Gravatar
mr ainsley c tidd

Friday, June, 1st, 2018

Andy Allies comments do give me concern, i have been aware of the discrepences of the motobility scheme for some time and it is most definatly broken . when you can get a better deal from a main dealer on finance than on motability you know there is excessive profit, and someone is abusing the motability system and the tax payer. not a lot of people know that there is a difference between motability the charity and motability operations ltd which operates the scheme and makes huge profits from the tax payer and disabled motorists. the comments by frank field and the idea of one time only deposit amounts are completely correct.

John hepworth's Gravatar
John hepworth

Friday, June, 1st, 2018

I have been totally dependent on the Motability scheme to get about sincemy spinal injury 10 years ago and whereas I had an upfront passenger VW with small downpayment in the early days I now am limited to a much lesssuitable vehicle , less comfortable and a poor performer as this is all I can afford. If Motability are indeed awash with funds they should reduce if not get rid of the down payment . I am somwhat disappointed that once again a charity pays its executives fatcats salary.

John hepworth's Gravatar
John hepworth

Friday, June, 1st, 2018

I have been entirely dependent on the Motability scheme to get out and about since my fall which left me C4 tetraplegic and I have lots of praise for this unique organisation but once again I am disappointed that a charity pays its executives fat cats salary instead of funelling the profits back into beneficiaries. The risk free character of The Motability scheme does not make it comparable to other business organisation. I am in favour of a government led review of its workings,

Philip's Gravatar

Friday, June, 1st, 2018

We are relatively new to Motability (this being only our second vehicle) but like others feel the advance payments, particularly on the larger motors can be off-putting, and sadly prohibitive especially for anyone relying solely on benefits but who needs the advantages of a larger vehicle to carry equipment etc. I would hope that at the very least this enquiry could result in some means of lessening the impact of high AP's on individual customers being found such as using the large surplus that Motability has built up and introducing more realistic salaries for executives.

DON FISHER's Gravatar

Friday, June, 1st, 2018

I cannot believe what I've just read, about the money in reserve and how much the man in charge is being paid. With no competition how do they justify the costly up front payments for these cars. What happens when there is excess money, as we are never consulted by motability unless we contact them for any reason.I totally agree with Nigel Blair.

Robert's Gravatar

Friday, June, 1st, 2018

The problems we are now finding with Motability cars is the high AP for a vehicle which will accept a non folding wheelchair. We have had to go for a smaller car and finding it a struggle for space and uncomfortable driving position. The problems we have found over the years with Motability is, 1 You can only get your tyres from Kwik Fit. 2 Motability says if your car needs tracking Kwik Fit will do it. Kwik Fit says Motability will not pay for it so they can not do it. 3 Motability deciding when a service should be carried out and not sticking to Manufactures service schedule just so they can save money.

C CROTTY's Gravatar

Friday, June, 1st, 2018

As someone whose ability to afford large deposits has reduced my choice of cars any reduction in deposits would be welcome the scheme is a marvellous thing and a great boost to many disabled drivers giving them freedom and independence but improvements can always be made and should be made This report makes interesting reading and should be acted upon but not at the expense of great things about the scheme or the detriment of disabled drivers /car users

David Nixon 's Gravatar
David Nixon

Saturday, June, 2nd, 2018

My wife drives a Motability vehicle with an automatic gearbox and because of this feature the advance payment is unreasonably high to the point she is thinking of opting out of the scheme at the end of the 3 years.

Gordon Turner's Gravatar
Gordon Turner

Monday, June, 4th, 2018

Whilst Motability is a good idea it discriminates with persons on lower PIP rates. For instance, I am on standard mobility for my mobility and intermediate rate for Activities of Living. I depend 100% on having a car for my mobility issues but only those on the top rates are eligible for Motability assistance and Car tax exemption. Consideration should also be given to persons on lower PIP rates whose mobility is less than perfect to enable them to have effective help in obtaining affordable car purchase options.

Mr David Blair's Gravatar
Mr David Blair

Thursday, August, 2nd, 2018

in all businesses you have to tender for work Motability are crooks they charge the people who are buying the cars FULL RETAIL PRICES When you go and buy a car we all know the prices are inflated so the look good giving a discount so paying advanced payment on a car full retail is wrong it needs to be on the price Motability gets them for if you want to buy the car after 3 years they again inflate the price to put you off buying it but they are happy to sell them at auction and get less So come on you MPS GROW A SET AND KICK THEM OFF LET THE CAR COMPANYS OFFER THERE OWEN REDUCED PRICE AGGREED BY A MOTABILTY GOVERMENT APPOINTED PERSON GET US DISABLED PEOPLE A BETTER DEAL NOT HAPPY AT ALL