Budget’s Motability taxes ‘are devastating, punitive and baffling’ and will add hundreds to upfront payments

“Devastating” and “punitive” tax changes to the Motability scheme that will add hundreds of pounds to upfront payments to lease cars are “baffling” and “unjust” and threaten to “lock disabled people out of daily life”, say campaigners.

They spoke out after chancellor Rachel Reeves yesterday (Wednesday) announced in the budget that she was imposing VAT at 20 per cent on most advance payments for cars leased through the scheme, and removing the current 12 per cent insurance premium tax exemption.

Only vehicles with substantial adaptations for wheelchair- and stretcher-users will be exempt from the new taxes, which will be imposed on new leases from next July.

The taxes on disabled people are expected to bring in £355 million a year by 2030-31, with the budget document saying the previous “generous tax breaks” had been “subsidising provision beyond the scheme’s core objectives, such as the lease of luxury cars”.

Only 41 models are currently available without an advance payment, a tiny proportion of the 847 cars the scheme offers.

Motability Operations, the company that runs the scheme, said the tax changes would mean the scheme “will become more expensive for disabled people” and that the average advance payment was likely to increase by about £400.

The models that will remain available to lease through the scheme without an advance payment are unlikely to come with the extras that ensure the vehicles are accessible to many disabled people, disabled campaigners warned yesterday.

Motability will also remove overseas breakdown cover from the scheme and lower the mileage limit on its leases, and it said it was creating a new “special investigations unit”, even though the rate of “misuse” had remained stable, following a “growth in customer numbers”.

The Treasury’s budget costings document admits that the new taxes will mean that some disabled people “may reduce their expenditure on a vehicle lease or withdraw from the scheme entirely”.

Reeves attempted to justify the policy by claiming the scheme was set up “to protect the most vulnerable”, even though – according to Motability figures – one in five disabled people on the scheme say their vehicle improved their job opportunities, allowing them to work two more days a week on average.

The scheme allows disabled people to access work, healthcare, education and training, says Motability Operations.

The chancellor’s announcement came only 24 hours after the government pressured the company to announce that it was removing all its “premium” brands” – such as BMW, Jaguar and Mercedes – from the scheme.

The changes have already caused real anger among disabled people’s organisations and other disabled people.

Disability Rights UK said the “punitive” changes to the scheme were “baffling” and “unjust”.

It said: “They are yet more government actions that place the burden and blame on disabled people instead of taking responsibility for inaccessible public transport and workplaces that they have the power to change.

“And why go after Motability now? Is it a fiscal decision, or are they simply taking their ideas from the right-wing press, who have concocted a scandal out of thin air?”

Transport for All said it would fight the changes Reeves has announced.

It pointed out that disabled people faced significant barriers to accessing public transport, which meant many of them needed to lease a car, and the new taxes threatened “to lock disabled people out of daily life, by preventing us from having a vehicle”.

Emma Vogelmann, co-chief executive of Transport for All, said: “Today’s budget is a cost-cutting exercise at the expense of disabled people, who are already facing sharp cost-of-living increases.

“Our community will continue to resist, until every disabled person can access a vehicle that best meets their requirements, and disabled people can travel easily and confidently.”

Caroline Collier, from Inclusion Barnet’s Campaign for Disability Justice, said: “The fact that the chancellor has not returned for any more social security benefit cuts (beyond the cuts to universal credit already legislated for next April) is a testament to the success of the campaign by the disabled people’s movement and allies to block the projected cuts to personal independence payment.

“This makes it all the more dismaying and unacceptable that the government in this budget has decided to go after Motability.

“Given that these are measures that will clearly reduce mobility for many disabled people, it seems that this is all about appeasement of a hostile press campaign rather than responsible policy-making.”

Motability Operations also announced this week that it planned to ensure that, by 2035, half of all vehicles leased through the scheme have been built in the UK, compared with seven per cent currently.

This would mean an increase from 22,000 to 150,000 vehicles a year, which will include vehicles built abroad but converted into wheelchair-accessible vehicles in the UK.

Meanwhile, Treasury documents show that, from next April, the government will increase the “capacity” of the Department for Work and Pensions (DWP) to carry out reassessments of disabled people’s capacity for work through the work capability assessment (WCA).

DWP will also carry out more face-to-face assessments, which have been drastically cut back since the early weeks of the pandemic, both through WCAs and assessments of eligibility for personal independence payment (PIP).

And the Treasury’s budget costings document says DWP will be “changing the frequency” of reviews of PIP awards, allowing the department to “complete award reviews on time, reducing the number of people who are called to a PIP assessment when their function has not changed, and allowing providers to redirect resource to WCA re-assessments”.

The budget document describes this measure as “extending Personal Independence Payment award reviews periods”.

The budget costings document says these changes will “ensure people receive the right health or disability benefit and the system is sustainable”.

The changes will save the government £85 million next year, and as much as £580 million a year by 2029-30.

Neither the Treasury nor DWP had clarified these details by noon today – or explained how these changes would cut spending so sharply – although the Treasury said they were “existing plans”.

Rick Burgess, a spokesperson for Greater Manchester Coalition of Disabled People, said in response to the chancellor’s speech: “Yet another budget of austerity for disabled people.

“Spiteful changes to Motability and more abusive DWP assessments were the main actions, frozen tax rates will hit disabled people on poverty wages the most, while social care remained abandoned to permacrisis.

“The cumulative hostility towards us remains unchanged from the last government.”

*Motability Foundation, the charity that oversees the scheme, is a Disability News Service subscriber

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