The cars still available on the Motability scheme if luxury models are cut ...Middle East

Disabled drivers are bracing themselves for a major shake-up of the Motability scheme, should the Government push ahead with radical reforms at the Budget.

The Chancellor Rachel Reeves is said to be looking at imposing VAT on the taxpayer-funded car leasing scheme for the first time in a bid to raise £1bn a year.

Ministers are also thought to be keen on changes to stop people accessing “luxury” models such as BMW, Audi, and Mercedes-Benz via the scheme.

The Transport Secretary Heidi Alexander recently said she would be “comfortable” with those brands no longer being an option.

Reform UK has called high-end cars being available to benefits claimants an “absolute scandal”. Nigel Farage’s party even suggested bringing back three-wheeled Invacars, which were scrapped in the early 1980s over safety concerns.

The Treasury is also concerned about the fairness of benefit claimants getting car models beyond most working families. A Treasury source previously told The i Paper high-end brands went “far beyond providing essential mobility”.

The i Paper took a closer look at what possible changes could mean for the range of cars available to disabled motorists -– and the extra costs they could face.

Only 6 per cent of Motability cars are luxury models

A wide range of the Motability cars – including BMWs, Audis and Mercedes – are available in exchange for most or all of the disabled driver’s £300-a-month personal independence payment (PIP) mobility allowance.

Motability Operations, the company running the scheme, sells cars on the second-hand market at the end of the leasing arrangement, which is typically three years.

However, drivers do have to pay more in up-front payments for premium car models. Advance payments can range from nothing at all for some of the most basic mainstream models, up to £7,999 for the likes of the Audi Q4 and BMW i4.

“For any car that costs more than the mobility allowance, customers contribute the difference themselves,” said a Motability Operations spokesperson.

Motability Operations said 94 per cent of the vehicles in the scheme’s 700,000-strong fleet are from mainstream brands.

Only 6 per cent of the fleet, around 50,000 cars, are luxury models from BMW, Audi, and Mercedes-Benz.

It means a wide range of cars – such as Peugeot, Citroen, Kia, Ford, Skoda, Nissan, Renault and Vauxhall – should still be available if premium brands were stopped.

Motability Operations says that offering such a wide range of models – including premium brands – boosts its “negotiating power” to get better deals from manufacturers, keeping down costs for drivers.

‘Why shouldn’t disabled people have the choice?’

Yolanda Barker, a PIP claimant who has secondary progressive multiple sclerosis (MS), has a Peugeot 5008 leased through Motability.

The 54-year-old from Kent had to pay £4,000 up front for the car, which was specially-adapted, along with £300 of her monthly PIP payment. One of the back seats was taken out for a hoist to get her wheelchair in.

“My car is a lifeline,” she told The i Paper. “It’s so important to get to appointments, to get to the voluntary work I do, to give me independence.”

Barker said the idea of imposing tax on the scheme “feels unfair”. She could not afford a Motability car if the advance payments went up significantly at the end of her lease next year, she added.

Motability Operations says the advance payments would have to increase somewhere between £3,000 and £6,500 per car, on average, if Reeves imposes VAT.

“It’s a very worrying time,” said Barker. “I feel we’re being unfairly targeted by the Government. The rhetoric around luxury cars is unhelpful. Most people don’t have them. Most people are just looking for a car that’s safe, that’s suitable, that they can afford.

“Why shouldn’t disabled people have the choice?” Barker added. “If you want to pay extra for a high-end model, and you have enough money, then it’s up to you.

“Many disabled people are in work, so in some cases they can afford it. Perhaps they want their life to feel a bit more normal.”

A Motability Operations spokesperson said: “Some customers require larger or specially adapted cars, which are often more expensive, so it’s important they have access to a choice of brands and models that enable them to travel safely, practically and affordably.”

Taxing luxury cars ‘could be unfair and divisive’

Car industry experts warned that it would be difficult for the Treasury to interfere in which types of cars Motability Operations should and should not provide.

The company remains completely independent of Government, despite more than £3bn worth of PIP money being handed to the scheme last year.

Stephen Latham, the commercial manager of the National Franchise Dealers’ Association, said a new VAT burden could naturally discourage users away from the premium cars because the advance payments would become so big.

Adding at least £3,000 in tax would push up the advance payments on those luxury vehicles to more than £10,000.

Latham commented that the Government could look at imposing VAT only on premium cars – leaving mainstream models alone. “But that could be seen as unfair and divisive,” he said.

Robert Forrester, chief executive of the Vertu Motors car dealership group, said it would be difficult for the Government to decide which cars should be taxed.

While BMW, Audi and Mercedes-Benz are considered the premium brands, many of the most expensive, highest-spec cars produced by other manufacturers have the same value.

The Hyundai Santa FE – a large SUV with leather seats – has the same £7,999 advance payment as BMW and Audi models available on the scheme.

“The differentiation between mainstream car models and premium car models is not very useful,” Forrester said. “It’s an artificial distinction.

“Most mainstream manufacturers are making expensive, high-value cars, as well as less expensive options.”

Forrester warned against tax changes, saying it would lead to a “substantial reduction” in the number of people using PIP money on Motability cars – hitting sales and threatening sales in the auto industry.

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The SNP-run Scottish Government urged Labour to abandon any possible tax changes to the UK-wide Motability scheme.

Scotland’s Social Justice Secretary Shirley-Anne Somerville warned in a letter to Reeves and the Work and Pensions Secretary, Pat McFadden, that they must not “balance the books” at the expense of disabled people. “I would strongly urge you to abandon these proposals,” she wrote.

A Motability Operations spokesperson said: “We offer our customers a wide range of vehicles to meet their individual mobility needs.”

A DWP spokesperson said Motability was responsible for determining what vehicles they offer.

BMW and Mercedes-Benz declined to comment. Audi was approached for comment.

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