Motability Operations commits to reducing its capital reserves

By agency reporter
June 21, 2019

At the request of the Treasury and Work and Pensions Committees, the National Audit Office (NAO) launched a review last year into the Motability Scheme, which is designed to provide people entitled to mobility support through Disability Living Allowance or Personal Independence Payments with access to a vehicle.

Motability Operations, which provides the individual with a leased car, has £2.5 billion of reserves. The NAO called this level of reserves “intentionally conservative”, and the two committees said Motability Operations’ reserves are “out of proportion to the risks it faces.”

On 14 June 2019, following an external review of its reserves policies, Motability Operations issued a press statement, which said:

  • The Board resolved to release capital reserves to a level of £370 million below the September 2018 balance sheet position.
  • The Board plans to commit £100m of this release to support customers. The balance of the remainder, along with all this year’s profits, will be donated to Motability to provide wider support for disabled people and their families.

Commenting on this announcement, Nicky Morgan MP, Chair of the Treasury Committee, said: “As our Committees have concluded recently, Motability Operations’ significant financial reserves are difficult to square with the honourable objectives of the scheme.

"Last week’s announcement by Motability Operations – that it will release £370 million from its reserves to support customers and disabled people with mobility needs – is good news for members of the scheme. Motability Operations must now ensure that its customers will benefit from this either in the form of lower prices or more generous vehicular adaptations.”

Frank Field MP, Chair of the Work and Pensions Committee, said: “At long last and after months of chivvying by our committees and the NAO, Motability Operations has begun to accept that it can’t just sit there on piles of reserves built up thanks to the taxpayer’s unique support.

"That’s most welcome, but is only a first step. There is still a way to go before we are satisfied that Motability is even beginning to make the best use of its vast funds and privileged position, to provide the best possible service for disabled people.”

* Read the Work and Pensions Committee's report on the Motability scheme here

* Work and Pensions Committee https://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/

[Ekk/6]

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