Motability scheme reforms could save government £1bn by 2030
Ministers are predicting savings of £1bn by 2030 through major reforms to the Motability programme, which helps disabled people obtain vehicles.
The program faced serious scrutiny last year after reports emerged that luxury brands including BMW and Mercedes were being accessed through the program.
Rachel Reeves introduced changes to the Budget by removing these top tools. The additional measures announced in the autumn have now begun to be implemented.
Motability customers opting for larger, more expensive cars through optional one-off advance payments will now be subject to VAT and all new leases will be subject to insurance premium tax.
Work and Pensions Minister Pat McFadden said: “Today’s changes are driven by the fairness that underpins this Government – fairness for taxpayers, fairness for disabled people and fairness for the country.
“By removing VAT relief on some new Motability leases, we are saving £1bn of taxpayers’ money while ensuring the scheme continues to support the mobility and independence of disabled people.
“We are building a fair welfare system and an economy that works for everyone.”
Ministers are trying to reform the benefits system to save money and enable more people on sickness benefit to return to work.
Andrew Miller, managing director of Motability Operations, the company that runs the Motability scheme, said: “The tax changes announced in the UK Government’s Autumn Budget have significantly increased the cost of running the Motability programme.
“Whilst we have had to make difficult decisions in response, the changes we have made mean the plan can keep disabled people connected to freedom and independence now and into the future.
“The program continues to provide value to people with disabilities, including cars without advance payments on top of their weekly payments.”
A group of leading charities has called on the government to reconsider cuts to the Motability program after experts warned of the negative impact it would have on disabled people.
70 organisations, convened by Transport for All and supported by Labor MP Neil Duncan-Jordan, have written to disability minister Sir Stephen Timms, asking him to engage with disabled people to understand the full impact the changes will have.
Signatories, including Disability Rights UK, Amnesty International UK and the Trussell Foundation, wrote in March: “Motability is a vital plan and these cuts will create further barriers to employment, education, accessing medical appointments and living independently for disabled people, including those with long-term and progressive conditions.
“We call on the government to urgently engage with disabled people, deaf and disabled organisations, as well as other organizations working with disabled people, to understand the real-world impact of these policy changes.”
