Motability faces investigation into financial operations

Motability, the charity provider of lease cars, wheelchairs and scooters to disabled people, has come under fire over its financial operations. 

Motability Operations, which receives around £2 billion per year from the Department of Work and Pensions, has accrued a £2.4bn reserve in cash - a four-fold increase over 2008. Meanwhile, the salary of CEO Mike Betts increased by 78% over the same period, up to £1.7 million last year. Motability says this pay was based on comparison with FTSE 250 firms.

The company’s income comes from the Disability Living Allowance, War Pensioners’ Mobility Supplement or mobility component of the Personal Independence Payment of people with registered disabilities. More than 600,000 British citizens use the scheme.

No money comes directly from the Government, but Motability is granted exemption from VAT and Insurance Premium Tax, costing, the committees have revealed, £700 million annually to the Government.

MPs from the Treasury and Work and Pensions select committees have criticised Motability's operations, calling Betts’ salary “totally unacceptable” and describing the cash reserves the company holds as disproportionate to the risk it faces.

The committees have recommended an investigation from the National Audit Office (NAO), saying: “given Motability’s privileged position, the absence of competitive tendering, reliance on public funds and question marks over its approach, it has a clear responsibility to accept such a full-access review.”

Head of the Work and Pensions Committee, MP Frank Field, said: “The levels of pay pocketed by its executives and the cash reserves it is hoarding are totally out of whack with the reality of its position in the market.

"That one member of staff is paid over ten times what the prime minister earns is one example of where Motability needs to get a grip of itself and realise the privileged position in which it trades.”

Given Motability’s status as a "taxpayer-supported monopoly" holder over its market, the committee has tasked the NAO to evaluate the company’s value-for-money to the taxpayer. 

Motability issued the following statement in response to the committee’s scrutiny: “We welcome that the report recognises that the scheme ‘provides an extremely valuable service to disabled people’ and one that has helped ‘millions of disabled people… have their lives greatly enhanced’.

“This reflects our priorities of always providing outstanding customer service, value for money and sustainability, and putting disabled people and their families on the road to freedom.