Until Rachel Reeves tightened the rules in last month’s Budget, Motability customers were able to sink into the leather seats of a top-of-the-range Mercedes. But however luxurious the upholstery, it can’t have been as thick and durable as the rhinoceros skin of Motability boss Andrew Miller. He has just been awarded a 23 per cent pay rise to £924,000. There are no prizes for guessing who is contributing to the largesse shown to him by his board. Nearly half of Motability’s £8.1 billion spending last year was covered by the government’s exploding welfare budget.
Motability has been under the spotlight
Just how impervious to public opinion do you have to be to accept such a rise when you know your organisation is under close public scrutiny? Motability has been under the spotlight since September when Matt Ryder, who was formerly head of policy on this issue at the DWP, wrote a report for the Adam Smith Institute attacking its extravagance. Remarkably, Motability now accounts for one in five of all new cars sold in the UK. It is pushing it somewhat to argue that disabled people should have a car provided for them at public expense whatever their private means; quite another to insist that that vehicle needs to be brand new and that it should be replaced with another new vehicle after three years. If Motability purchased secondhand cars, estimated Ryder, it could save £3.4 billion a year.
You might think, given the critical coverage over the past few months, that Motability’s board and directors would be minded to draw in their horns a little; at least to leave the CEO’s fat pay rise until next year. Not a bit of it. An organisation which is largely public-funded seems to think that it can treat with contempt the taxpayers who feed it. Its boneheadedness is interesting, not just because of what it tells us about Motability’s leadership, but what reveals in general about the weird no-mans land which occupies the space between public and private sectors.
Notionally, Motability is a private, independent ‘not for profit’ company. That is certainly how it behaves when it is setting its CEO’s pay. But when it comes to funding, it is effectively part of the public sector.
It is a bit like that other temple of extravagance and high pay, HS2 Ltd. Motability appears to want us to believe that it is not really costing the taxpayer anything because it is merely taking as payment the Personal Independence Payment (PIP) that its customers would be receiving anyway. All that Motability is doing is taking money which might otherwise be spent on taxi fares. But that ignores two things: firstly, that the government has set the level of PIP partly in response to the cost of new cars; if Motability was happy to supply used cars, PIP payments could be lowered. Secondly, the huge rise in people applying for PIP is heavily influenced by the fact that the benefit can be swapped for a brand new car. Does anyone really think that Britain is suffering from an epidemic of disability which has caused the number of people on PIP to rise from 2.8 million in 2022 to 3.9 million now? (Not all those 3.9 million PIP recipients qualify for a Motability car – it is restricted to the 37 per cent of claimants who are on the higher levels award).
Motability isn’t really just the charitable organisation it wants us to believe. It might not technically have ‘profits’, but the banks who assist it do a very nice line out of loans and fees: £900,000 worth of them last year. Then there is the car industry, which gets to sell large numbers of new cars it would have trouble shifting without the scheme. Welfare-claimants, banks and car-makers get the spoils because they have powerful lobbyists. Meanwhile, the taxpayer gets run over.
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