Parliament’s Treasury and Work and Pensions Select Committees have criticised the amount of reserves held by disability-fitted vehicle lessor Motability Operations, which they called disproportionate compared to the minimal business risk it faces as a monopoly supplier.
Motability Operations acts as a private company leasing vehicles to the disabled at advantageous rates, in exchange for part of their disability welfare payments. It is the only vehicle leasing company in the country entitled to receiving welfare payments, and also enjoys tax relief on VAT and insurance. The committees estimated the tax breaks cost government £700m a year.
The company did not go through a tender to attain its privileged position, which the committees called, “in effect, a monopoly supplier sustained by public money”.
“No other car leasing company is—or can be—so heavily dependent on public funding,” the committee said.
“Potential competitors cannot compete with Motability Operations,” it added. “Without any competitors on an equal footing, it is impossible to know whether disabled drivers would be able to access better loans elsewhere.”
The committees called cash reserves held by Motability Operations, which grew more than threefold to £2.8bn between 2008 and 2017, were disproportionate to the extremely low-risk position the company enjoys.
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It called the £1.7m annual pay for the company’s chief executive “totally unacceptable”.
“Motability Operations could well afford to reduce its prices or make very substantially higher charitable donations,” the commitees said.
It added: “Motability provides an extremely valuable service to disabled people. That should not, however, exempt it from scrutiny.
“The National Audit Office (NAO) should conduct a review of the scheme and the organisations running it.
“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. The Committees will consider the review’s conclusions carefully.“