Motability
Motability is a charity in the United Kingdom. It oversees Motability Operations Ltd, which runs the Motability Scheme intended to enable disabled people, their families and their carers to lease a new car, scooter or powered wheelchair, using their disability benefit. Currently, the scheme has more than 650,000 customers.
| Formation | 1977 |
|---|---|
| Founder | Jeffrey Sterling and Lord Goodman |
| Type | Public–private partnership charity |
| Registration no. | 299745 (as charity in England and Wales) 736309 (with the FCA) |
| Purpose | Oversee the Motability Scheme through Motability Operations Ltd |
| Location |
|
Chairman | Jeffrey Sterling |
| Website | motability |
Formerly | Motability Finance Ltd |
|---|---|
| Founded | 1978 |
| Headquarters | London and Bristol |
Area served | United Kingdom |
Key people | Matthew Hamilton-James (interim CEO) |
| Services | Operate the Motability Scheme on behalf of Motability |
| Revenue | £4.2 billion |
| £130 million (2016) | |
Number of employees | ~800 |
| Parent | Motability Operations Group PLC, owned by: |
| Website | motabilityoperations |
Motability was founded in 1977 by Lord Sterling of Plaistow and the late Lord Goodman and the Motability Scheme launched at Earl's Court, London, on 25 July 1978. It was initially targeted at motorists aged 16–19 years, with some 220 applications being processed at the beginning of the scheme.[1]
It is a partnership between the charitable sector, the UK government, leading banks, and the motor and insurance industries. Since 1978 over three million[2] cars, scooters and powered wheelchairs have been provided to help disabled people with their mobility needs.
Queen Elizabeth II has been the Chief Patron of Motability since its foundation.
History and beginnings
By the mid-1970s over 40% of households in the country owned a car[3] but disabled people claimed that they were missing out. Only those who could drive themselves received any government help with transport, usually in the form of a blue trike which was unable to take passengers.
The Mobility Allowance – now called the mobility component of Disability Living Allowance – introduced by the Government in 1976 broke the mould in giving help regardless of ability to drive. It also signalled the Government's commitment to giving disabled people choice in the form of a cash allowance, rather than imposing certain types of vehicles on them.
The Mobility Allowance was a positive advance but it soon became clear that it was not large enough to buy and run even the smallest car. The then Secretary of State for Health and Social Services invited the late Lord Goodman and (now Lord) Jeffrey Sterling to consider how disabled people could use this allowance to affordably obtain a vehicle.
Thus Motability was born in 1977 and, often for the first time, disabled people could afford a good-quality car from any participating manufacturer, fully insured, serviced, and with breakdown assistance. Motability was set up as a charity so it could also raise funds and make grants, in order to provide customers with a complete mobility package even if their allowance would not cover the type of car and adaptations that they needed.
Motability opened up new horizons for many disabled people. Things that were once difficult to do, such as getting to work, going shopping, doing volunteer work, visiting friends, getting to the doctor, going swimming, giving a family member a lift, or enjoying a driving holiday, became easier. For some, enhanced opportunities for further education and profitable full-time employment became a reality for the first time.
On 25 July 1978 ten young people attended the first Motability Scheme vehicle handover at Earls Court in London and received the keys to their new vehicles from then Chairman Lord Goodman. Julie Newport, disabled by polio, was one of the ten to receive her keys and commented: "I think it's marvellous," saying the Scheme gave disabled people the freedom and independence they really wanted. Also present were Rt Hon Lord Morris, Rt Hon Lord Jenkin, Allan Beard and Jeffrey Sterling, the present Chairman of Motability.
In 2003, Motability celebrated its 25th anniversary with a garden at the Chelsea Flower Show. The garden included a Motability car, an adapted Renault Clio, to symbolise disabled people gaining access to the remotest parts of the countryside.
In October 2006, the Scheme hit the two million vehicles mark and Jeffrey Sterling commented: "Family life revolves around the disabled person so if you make someone mobile you don't help two million, it's more like six to eight million."
The late Lord Goodman described the establishment of Motability in 1977 as "the most successful achievement of my career and the most fortunate thought that ever came into my head".
How the scheme works
Disability Living Allowance (DLA) is not means tested. It is a benefit designed to help towards the additional living costs incurred by people with disabilities and is broken into two components, Mobility and Care. The Care component is valued at three different rates; lowest, middle and highest, and the Mobility component at two different rates; lower and higher.
The Scheme is open to anyone who receives the Higher Rate Mobility Component of Disability Living Allowance, the Enhanced Mobility Component of Personal Independence Payment, an Armed Forces Independence Payment or the War Pensioners' Mobility Supplement. As of April 2020, the amount payable for HRDLA, the Enhanced Mobility rate of PIP and Armed Forces Independence Payment is £62.25 per week and War Pensioners Mobility Supplement is £69.50 per week.[4] Those wishing to lease through Motability must have at least twelve months' award length remaining when they apply. The Care Component of DLA cannot be used to fund a vehicle through the scheme. Due to the weekly difference of £7.25 per week between War Pensioners Mobility Supplement and DLA/PIP/AFIP mobility components, the Motability advance payments for War Pensioners Mobility Supplement customers are lowered to ensure that over the course of the full 3 year lease all customers will pay exactly the same amount for a vehicle on the scheme.
Customers choose a new car every three years or a wheelchair-accessible vehicle every five years. More than 30 manufacturers currently offer cars through the scheme, with premium manufacturers such as BMW, Audi and Mercedes becoming popular alternatives to more mainstream suppliers such as Ford and Vauxhall. Insurance for two people, vehicle excise duty, servicing with a free replacement vehicle, tyres and breakdown cover are all included in a single monthly payment. This payment is made automatically by the Department for Work and Pensions or Veterans UK to Motability Operations under the authority of a CP50 form signed by the hirer. At the end of the contract period, the customer can choose to take another brand new vehicle. The customer may also wish to purchase their current vehicle directly from Motability at the end of their contract either for their own use or a friend's.
While many vehicles do not require the customer to pay anything above their Mobility allowance, the customer may choose to opt for a higher-specified model on payment of an Advance Payment which is non-returnable. Motability pricing is independently assessed as being more than 40% cheaper than retail lease agreements, which is possible because of the unique VAT concessions that the Motability Scheme enjoys. In addition, means-tested grants are available from the Motability charity for those who, because of the nature of their disability, have no option but to choose a vehicle which attracts an advance payment, or who may need special adaptations not already funded through the scheme. Many adaptations, such as push/pull brake/accelerator levers, are now also funded directly through the scheme so that the customer does not have to pay extra.
There are separate non-means tested grants for adaptations, including an automatic transmission grant of up to £660, paid by Veterans UK, for those in receipt of War Pensioners' Mobility Supplement, subject to needing the adaption(s) due to the War Pensionable disability/condition.
Market penetration
Almost 648,000 customers currently choose Motability for their mobility needs equating to more than 200,000 vehicles purchased per year by Motability Operations. Overall customer satisfaction is independently measured at 98%. In autumn 2015 Motability Operations was judged by the Institute for Customer Service to offer the 'highest customer service in the UK'.[5] Around two-thirds of Motability's customers drive their own vehicle, but non-drivers can get a car as a passenger. Similarly, parents and caregivers can also apply on behalf of a disabled child from the age of three.
Once their application has been accepted, the customer uses all, or part, of their allowance to pay for their vehicle for the period of the contract hire agreement. Over 450 models of car are currently available to lease with no advance payment – larger or more expensive models may incur this additional cost.
The largest fleet operator in Europe and the largest supplier of used cars in the trade, Motability Operations is owned by four major clearing banks – Barclays, Lloyds TSB, HSBC and the Royal Bank of Scotland.
Motability Operations’ annual turnover is around £4.2bn. Any surpluses are continually reinvested in the business. Motability Operations sells over 200,000 used cars a year and the company's car purchases account for approximately ten percent of total new car sales in the UK. Since the Scheme started, over four million cars have been supplied.
Structure of the scheme
The organisational structure of the scheme can be broken into two parts: Motability, which is a registered charity, and Motability Operations (formerly Motability Finance Ltd), a public limited company owned by five clearing banks which operates the car and powered wheelchair leasing scheme on behalf of Motability. Splitting the organisation is intended to provide for checks and balances and ensure accountability for the administration of public funds. Salaries paid to Motability Operations Group PLC management have attracted negative publicity,[6] with CEO Mike Betts taking home total remuneration of £948,243 in 2016, as reported in Motability Operations Group PLC's accounts.[7] Betts quit in 2018.[8]
Motability is a registered charity and has overall responsibility for the Motability Scheme, including:
- Directing and overseeing the Scheme;
- Raising funds to provide financial assistance through grants to customers who would otherwise be unable to participate in the Scheme;
- Administering the Government's Specialised Vehicles Fund which provides financial assistance for customers who need complex adaptations or to travel in their wheelchairs; and
- Providing technical support to customers and the adaptation and conversion industry.
Motability Operations has the exclusive contract for administering the scheme. Any profits are reinvested in the Scheme for the benefit of customers. In the financial year ending 30 September 2016, Motability Operations reported post-tax profits of £130m net of a donation to Motability (the charity) of £45m.
Motability Operations also set and monitors the standards of service provided by the dealer network, adaptations suppliers, breakdown company and the insurance company. Motability Operations also negotiates pricing with the vehicle manufacturers on a quarterly basis.
Insurance is provided exclusively by Royal and Sun Alliance who have a dedicated Motability division. Royal and Sun Alliance require any persons wishing to be one of the two named drivers to have no or possibly some minor endorsements on their driving licence in the last five years. The excess for any claims has recently increased but remains competitive at £100. A third driver is permitted for a small charge and, subject to certain constraints on vehicle choice, additional drivers can include anyone from age 17 upwards provided they live with the disabled customer. Drink-driving convictions require five years from conviction date to be eligible for insurance on a Motability car.
Breakdown cover is provided exclusively by the RAC.
Adaptations are supplied and fitted by independent specialists who are accredited to Motability.
Customers apply via accredited main car dealerships.
The Wheelchair and Scooter Scheme was operated by Route2mobility until June 2010, when it was taken over by Motability Operations.[9]
Welfare reform
In 2013, the Government started to introduce a new disability benefit, the Personal Independence Payment (PIP), which will gradually replace the Disability Living Allowance for disabled people aged between 16 and 64. Customers have started to be reassessed and as a result in some cases no longer receive an allowance that entitles them to access the Motability Scheme. Motability Operations have worked with Motability to devise a package of transitional support that pays up to £2000 to those customers who have lost their allowance as a result of the introduction of PIP. Motability Operations have donated £175m to Motability (the charity) to ensure that the cost of this package is supported.
Despite the introduction of PIP and the expectation that the number of customers on the Scheme would reduce as a result of the change, Motability customer numbers have stayed broadly static – only 25,000 customers left the scheme due to loss of their allowance in FY16, while 68,000 new customers joined.
Controversy
In 2018, a report by the Daily Mail newspaper in the UK levied criticism at Motability Operations for "stockpiling" £2.4 Billion in cash and assets.[10] MP John Mann of the Labour Party, who concurrently headed the Parliamentary Commons Treasury Committee, called the sum "outrageous" and expressed the opinion that it "should immediately be returned to the Treasury". MP Nigel Mills of the Conservative Party criticised Motability for "effectively hoarding [...] public money" and called for the UK's Charity Commission to investigate the matter.[11]
On 7 December 2018 the National Audit Office published its report on Motability which upheld many of the criticisms of executive pay and reserves policy. It also found that Motability had charged customers more than £390 million more than necessary for car leases over the past ten years and that the CEO was entitled to further payments beyond those that had already been disclosed.[12]
References
- "BBC ON THIS DAY | 25 | 1978: Motability gets moving in the UK". BBC News. 25 July 2000. Retrieved 12 February 2013.
- Motability, www.motability.co.uk. ""About Motability", ''Motability Website''". Motability.co.uk. Retrieved 12 February 2013.
- "UK Car ownership stats" (PDF). RAC. Retrieved 13 October 2015.
- "Motability Scheme". 26 April 2018.
- Motability Operations Group plc Half Year Report 31/3/16
- "Daily Telegraph article".
- "Motability FY16 Annual Report & Accounts" (PDF).
- "Motability boss Mike Betts to quit after £2.2m bonus revealed". Sky News. Retrieved 10 August 2020.
- ""Motability Scooter Scheme", ''Mobility Scooters''". Mobilityscootersandwheelchairs.wordpress.com. 25 November 2009. Retrieved 12 February 2013.
- "Taxpayer-funded car firm for the disabled 'stockpiled £2.4 billion'". www.msn.com. Retrieved 6 February 2018.
- "Boss of car scheme for disabled paid £1.7m out of taxpayer's pockets". Mail Online. Retrieved 6 February 2018.
- https://www.nao.org.uk/report/the-motability-scheme/