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The UK business that leases vehicles to people receiving disability payments is to crack down harder on potential misuse of the scheme, as it combats a rising row about the allocation of taxpayer funds.
Motability Operations is Britain’s largest car buyer, accounting for one in five new vehicles sold under a programme where people use government-funded disability allowances to finance a car or van.
The company, which has annual revenues of about £7bn, has no control over who is eligible for the scheme, but has an internal team that looks into claims of misuse that totalled 35,899 last year. Last year it removed 5,300 customers from the service, or an average 15 per day.
Now, the company will review the number of people allowed to use each vehicle — currently set at three to allow for carers to drive — after finding evidence of possible misuse, chief executive Andrew Miller said.
The company recently removed one disabled user after its tracking system discovered the vehicle was used to travel between his son’s home and his grandchildren’s school everyday. It also discovered a number of journeys that were happening between 11pm and 6am.
“We have to start looking at tracking more to try and counter some of the very valid challenges we’re getting on people using the scheme in not the way it’s intended,” Miller told the Financial Times. “Are we perhaps being too generous on the insurance criteria? We’re having to look at that quite heavily at the moment.”
The little-known company found itself thrust into the spotlight as a result of the government’s plans to overhaul the UK’s welfare system to save £5bn a year. The sharp rise in incapacity and disability benefit saw Motability’s user base grow 14.7 per cent last year.
Miller said that more than 40 per cent of its customers — with an average age in their 50s — have a household income of less than £20,000.
About 2.4mn people receive the mobility allowance in the UK, which they can use to supplement their living or to pay for public transport. About a third of those who receive the higher level of mobility allowance use the funds to lease from Motability.
The government decides on the eligibility by assessing the person’s ability — both physical and mental — to plan and undertake journeys independently.
Having a single channel for car buying allows for disability-specific expertise, preventing smaller dealers from potentially taking advantage of people who need to use the scheme.
Miller also pushed back against rising public criticism that the scheme was being used to buy Mercedes-Benz and Audi cars, saying the premium segment only represents 7 per cent of its fleet of more than 700,000 vehicles.
“It’s an unfair criticism because the bulk of our customers are not in these cars and are mainstream UK customers who happen to be disabled,” he said, adding that user popularity alternates between more affordable offerings such as the Vauxhall vans and the Nissan Qashqai.
In the past, the company drew some scrutiny over generous executive bonuses or its high level of cash reserves. But the recent attention has called into question its entire operation, with critics seeing the growth of the company as symptomatic of the UK’s bloated welfare system.
“Such outsized growth for a scheme originally designed to deliver targeted support to the most vulnerable underscores the need for fair but serious reform of both the welfare system and the state more widely,” said Chris Curtis MP, co-chair of the Labour Growth Group.
The Conservative MP Helen Whately, who is the shadow work and pensions secretary, described the scheme as a “textbook example of a well-intentioned idea that has got way out of hand”.
Experts have attributed the rise in claims for disability benefits to cuts in other parts of the welfare system that have created financial incentives for people to seek higher levels of payments, as well as a rise in the number of people with mental health conditions since the Covid-19 pandemic.
Miller said inflation had also increased vehicle and insurance costs, drawing more people to the scheme. In addition to providing the cars, the company covers insurance, tax, servicing and breakdown cover, protecting the users from market volatility but exposing the company to higher insurance and borrowing costs.
The company also borrows money to buy the vehicles, which are sold on the used car market after a three-year lease, making it one of the largest bond issuers in the UK. It is overseen by Motability Foundation, a charity, but its revenue is mostly generated from the sale of used vehicles.
Despite the scrutiny over its user base, industry players say a strong sector is important in helping drive uptake of electric vehicles, especially among lower-income households that may not have driveways for charging or be able to meet the steep upfront costs of the cars.
Motability offers charging options for customers that take electric vehicles, Miller said. “We’re just trying to do the right thing and make sure our customers are able to keep mobile as we go through the EV transition.”
