A company providing charitable support for disabled people's mobility through a 'monopoly' sustained by around £700m of public money every year has 'totally unacceptable' levels of senior pay and disproportionate reserves, MPs have said.
The Motability Scheme provides disabled people with access to a car, scooter or powered wheelchair in return for some of their welfare payments. It currently helps 629,000 people.
Motability provides access to a car, scooter or powered wheelchair.
Motability Operations, which helps run the scheme, paid chief executive Mike Betts £1.7m last year - an increase of 78% from £954,000 in 2008. The company also has reserves of £2.4bn, described by MPs as 'out of proportion to the risks it faces'.
It also benefits from two types of tax relief - a 20% discount on the value of the car, and Insurance Premium Tax (IPT), providing a 12% discount on the insurance element of leasing the vehicle.
'In practice, Motability Operations has a monopoly on these reliefs, which cost the Government around £700m per year,' MPs said.
In a joint and unanimously-agreed report from Treasury and Work and Pensions Committees, MPs called for the National Audit Office (NAO) to conduct a full value for money review into the Motability Scheme and called on the Government to explain 'why state assistance in absence of competition is an appropriate use of public money'.
Three organisations are involved in the scheme’s delivery and oversight:
- Motability Operations, a company which buys and leases vehicles;
- Motability, a charity, responsible for oversight of the scheme and making grants in support of its objectives;
- Motability Tenth Anniversary Trust, also a grant-making charity.
The report states: 'None of the three organisations receives direct funding from Government. But Motability Operations is the only private organisation entitled to receive welfare payments for the leasing of vehicles. It has received this privilege from Motability without a competitive tender.
'The benefits it receives provide a substantial and reliable source of income. No other vehicle leasing company is dependent on public funding. Motability Operations—via the DWP—also benefits from substantial Value Added Tax (VAT) and Insurance Premium Tax advantages to which no other vehicle leasing company is entitled. Potential competitors cannot compete with Motability Operations. It is, in effect, a monopoly supplier sustained by public money.'
It adds that 'Motability Operations could well afford to reduce its prices or make very substantially higher charitable donations'.
It concludes: 'Motability, given its privileged position, the absence of competitive tendering, its reliance on public funds, and the question marks over its approach, has a clear responsibility to accept [a full review into its finances]. The Committees will consider the review’s conclusions carefully.'
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.
However he added: '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.'
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