Rachel Reeves plots £1bn cut to Motability scheme which lets disability claimants access cars
Rachel Reeves is planning to restrict disabled people’s access to cars through the benefits system in a bid to save £1bn, it has been revealed.
The Chancellor is reportedly considering reforming the Motability scheme in a bid to save money and boost public confidence in the welfare system.
It is said to be set to scrap tax breaks worth around £1bn each year in next month’s Budget, with an exemption allowing cars leased under the scheme to avoid paying VAT or insurance premium tax being cut.
And in another change, luxury cars, including Mercedes and BMWs, could be eliminated from the plan. Times reports.
The Chancellor has been warned by the Institute for Fiscal Studies that he must find at least £22 billion in tax increases or spending cuts in the November Budget to avoid a “rainy day” scenario where the public finances face another black hole next year.
The Motability program provides cars to approximately 815,000 users, including approximately 40,000 luxury vehicles. It is mostly open to people claiming a qualifying mobility allowance through Personal Independence Payment (PIP).
But it has come under criticism in recent months and formed a large part of Kemi Badenoch’s speech at the Conservative Party conference; Critics have alleged that so-called “sick influencers” online are teaching people to game the system to claim free cars.
Speaking in Manchester, Ms Badenoch said: “These cars are not for people with ADHD.”
Shadow work and pensions secretary Helen Whately said: “Millions of people are getting help for anxiety and ADHD, as well as a free Motability car.
“TikTok videos tell you how to do it; some people even pay for VIP services to increase their chances of successful benefits.”
Disability groups have criticized the proposed changes, saying they would make life more expensive for those with serious health problems.
But sources said Times The changes are about fairness, not just cost-cutting. The Motability Foundation, which oversees the scheme, paid its chief executive £658,000 last year, with profits of £748 million in 2023, one said. This fell to a loss of £565 million last year.
It is currently costing taxpayers £2.8bn, with some of the claimant’s disability benefits being spent on a new car.
Emma Vogelmann, co-chair of the disability group Transport for All, said public transport was “mostly unusable” for people with disabilities due to poor pavements and “non-existent bus routes”.
“The Motability car is changing this; it allows us to work, shop and do the school run. Downsizing the scheme would take disabled people away from everyday life. Does the Chancellor want to take away our freedom?” he said.
Meanwhile, charity Scope warned that the changes could “impose extra costs on disabled people across Britain”.
“Restricting eligibility for Motability could hit low-income disabled people hard,” said strategy director James Taylor. Independent.
Reform UK also attacked the Motability plan, with head of policy Zia Yusuf saying spending on the scheme was “out of control”.
“Motability programs are designed to support people with real, life-limiting disabilities, and many of those who benefit from these programs are not even physically disabled. Targeted support should only go to those who truly need it,” he said.
Matt Ryder, the former head of Motability at the Department for Work and Pensions, also called on the chancellor to reassess whether subsidies given to the scheme are “delivering real value for money”.
A Treasury spokesman said: “We do not comment on speculation about tax changes other than financial events.”
