Motability Operations stays silent over how much high street banks benefit from disabled people’s car scheme

The company that runs Motability has repeatedly refused to say how much money the four high street banks that own the business are making from the £7 billion-a-year disabled people’s vehicle leasing scheme.

Motability Operations, which is owned by Barclays, Lloyds, NatWest and HSBC, reported nearly £7 billion in revenue last year, but it has never been clear how much the four banks make from their long-standing ownership of the company.

Analysis of the company’s accounts suggests the banks receive tens of millions of pounds every year in fees, charges and interest, but Motability Operations declined to comment on that estimate this week.

Disability News Service (DNS) provided the company with four opportunities to clarify how much the four banks made from the scheme, but it had failed to do so by noon today (Thursday).

Motability Operations said the banks had allowed their dividends to be invested back into the scheme, and that they had cancelled about £10 million-worth of preference shares.

It also said that the banking services it used were subject to competitive pricing, and that the four banks were consistently the most effective at enabling access to the capital markets, while its funding and capital model had been independently reviewed.

It said the prices it paid to secure funding for the disabled people’s vehicle scheme were “commercial, arm’s-length and competitively tendered”.

A Motability Operations spokesperson said: “Like any organisation accessing capital markets for investment, we pay banking and financing fees on a competitive basis.

“These fees are not profits – there will be a cost associated with providing these services.”

The scheme – which plays a vital role in providing mobility to hundreds of thousands of disabled people across the UK – has come under increasing scrutiny from the mainstream media in recent months, particularly from right-wing newspapers that have used their articles as part of continuing attacks on the level of government spending on disability benefits.

But disabled campaigners have also raised concerns about the scheme over the years, including concerns over the size of the company’s reserves, and the level of bonuses and salaries paid to its senior executives, although these appear to have fallen significantly in recent years.

They continue to call for more to be done to reduce the advance payments many disabled people have to make to lease vehicles through the scheme, particularly wheelchair-accessible vehicles, and to increase the number of grants given to disabled customers.

Many of the scheme’s wheelchair-accessible vehicles, particularly drive-from-wheelchair vehicles, are unaffordable without such grants.

About 86 per cent of Motability’s customers lease a standard production car, but seven per cent need adaptations to their vehicle and four per cent take a wheelchair-accessible car or van, while three per cent lease a powered wheelchair or scooter.

There are also concerns about the impact of proposed government cuts to disability benefits on the scheme.

While disabled people who receive the mobility component of personal independence payment have been protected so far from the proposed cuts, Labour is planning annual cuts of £4.5 billion a year to the daily living element of personal independence payment (PIP) by 2029-30.

Motability Foundation*, the charity that oversees the operation of the scheme, told DNS this week that some disabled customers could have to return their vehicles because of the cuts so they can use their PIP mobility payment** to cover some of their daily living expenses instead.

A spokesperson for the charity said: “It is possible that some people may need to reassess how they use the enhanced rate mobility component of their PIP award and make the difficult decision to stop using the Motability scheme, therefore the number of people using the scheme could fall.”

Motability Operations declined to comment on the impact of the PIP cuts on the scheme, other than to say that there would be no immediate changes in how the scheme works or who is eligible.

A spokesperson said: “We do not publish forecasts or analysis of potential growth.”

Paul***, a disabled campaigner who has spent weeks examining the financial and governance structure of Motability Operations, is highly critical of the scheme and believes it has become “a financial ecosystem using disabled people as a delivery mechanism for private sector profit.

“Disabled people are not customers with choice: Motability has a monopoly on benefit-linked car leasing, and users cannot seek alternative providers.”

He said the scheme also provided almost guaranteed demand for car manufacturers, and played a “significant role” in supporting the motor industry, with reports suggesting that one in five new cars sold in the UK every year are bought by the scheme.

Motability Operations said this week that it was for the government to decide if introducing competition would allow disabled people to continue to access the vehicle options that are currently open to them through the scheme.

But advance payments are continuing to rise, with wheelchair-users having to pay at least £4,000 to lease a vehicle, in addition to their monthly PIP mobility payments.

Paul said this has put a financial strain on many disabled people.

Motability Operations said it spent £85 million last year subsidising the price of wheelchair-accessible vehicles (WAVs), which are more expensive than standard vehicles, while the charity spent more than £27 million in grants to WAV customers.

Motability Foundation said rising motoring costs, inflation and changes in the car market had meant some advance payments had risen, particularly for the more expensive vehicles, although Motability Operations said the payments had not increased by as much as competitors.

Paul also highlighted the continuing increase in the level of Motability Operations’ capital reserves, which are now at £4 billion, and are held through ownership of nearly a third of its £14 billion fleet of vehicles.

Motability Operations said this level of reserves allows it to obtain different sources of funding, manage its risks – such as falls in the value of used cars – and reduce borrowing to fund the vehicles on the scheme, and are “essential to keeping the scheme stable, affordable, and open to more people”.

Seven years ago, when the company was at the centre of a political storm over its management and levels of executive pay, Motability Operations was criticised by the National Audit Office for holding £2.62 billion in reserves.

NAO called for it then to “hold a lower level of reserves and increase the level of funds available to distribute to the charity”.

Motability Operations said this week that the number of people accessing the scheme had increased by more than 30 per cent since 2018, and that its reserves were “independently set”.

But the level of reserves has increased by more than 50 per cent since 2018, much higher than the increase in customers.

The company said the risk associated with fluctuating used car prices had “increased significantly since 2018, particularly following the pandemic, supply chain issues and the transition to electric vehicles.

“We reported a £564.6 million loss in our 2024 annual report, in part due to changes in the residual values of vehicles on the scheme.”

Motability Foundation said any profits from the company are re-invested back into the scheme, or donated to the charity, which provides grants to individuals who need help to access the scheme, as well as funding research, innovation and grants to other charities.

Motability Foundation’s own level of general reserves – separate from an endowment set up in 2019-20 – were reported as £430 million 12 months ago, which was about four times the level of grants it hands out every year.

Its key source of income for its grants is from Motability Operation’s profits, but because of its loss last year the company did not make a donation in 2024, while the charity says further donations in the “near future” are “unlikely”.

A Motability Foundation spokesperson said: “We have sufficient funds to cover the next five years at current spend levels, which includes using investment income generated by the endowment during that time.

“Beyond 2030, if we do not receive a donation from Motability Operations we would need to reduce grant-making and use the money invested in the endowment to fund grants, reducing future income and potentially damaging future sustainability of the Foundation’s work.”

Motability Foundation said the size of the scheme, “alongside the universal access it affords, ensures that we are able to secure discounts from manufacturers to make the scheme as affordable as possible, whilst also supporting customers with more extensive needs through cross-subsidy”.

A Motability Operations spokesperson said: “The Motability scheme gives 815,000 disabled people the freedom to get to work, school, and medical appointments – helping them live independently and play an active role in society.

“We’re committed to ensuring the sustainability of the scheme during this period of change.

“Our business model is set up to ensure that our operations can adjust to any changes in demand and that we continue to keep people connected now and in the long term.”

Among critics of the scheme is Ian Jones, a Motability customer and co-founder of the WOWpetition, although speaking in a personal capacity.

He called on Motability Foundation to do more to support disabled people in the lead-up to the cuts in PIP, even though they will not affect the mobility component.

Jones said he believed that both Motability Operations and Motability Foundation should be doing more to make the scheme affordable.

And he said he had serious concerns about the transparency of Motability Operations, and that it was “worrying” that it was refusing to release information showing how much the banks were making from the scheme.

He said: “Disabled people feel like they’re being attacked and scapegoated again by the government, so I would expect the charity to be talking about how they will help people keep their cars.

“This is being portrayed by the government as a short-term financial crisis.

“If that is correct, why shouldn’t Motability Foundation and Motability Operations use these substantial reserves to help the people they are supposed to help?”

Paul fears that public funds meant to uphold disabled people’s rights are instead being “channelled into a closed system of financial accumulation — with no transparency, no competition, and no public control”.

He said: “The scheme has evolved away from its original purpose of directly supporting disabled people’s mobility needs.

“It now operates as a complex financial structure in which the role of disabled people is primarily as the mechanism through which public funds are channelled to private sector beneficiaries.”

*Motability Foundation is a Disability News Service subscriber

**Only those receiving the enhanced rate of PIP mobility, and other mobility benefits, can lease a vehicle through the scheme

***Not his real name

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