Welfare Reform and Work Bill

Lord Kirkwood of Kirkhope Excerpts

Monday 21st December 2015 Lords Chamber

Moved by

[Lord Kirkwood of Kirkhope]

104AA: Clause 20, page 19, line 25, at end insert—
“( ) Any relevant provider assisting with any provision for the expenses of the Secretary of State under subsection (2)(a) shall provide an annual governance report to Parliament or the Public Accounts Committee of the House of Commons, detailing—
(a) the remuneration of its directors;(b) a register of interests; and(c) the transparency of its board meetings.”

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I hope not to detain the Committee for too long in the consideration of the administration of DWP matters and other things.

I am grateful for the support of the noble Lord, Lord Rooker, on this amendment, and it is to him that I acknowledge my interest in this matter. I was minding my own business at one of the famous uprating order debates, which I always attend, when the noble Lord used the occasion in an exemplary fashion. The man is a parliamentary genius at finding niches that come up only every so often, and in this case it is our old friend the Social Security Administration Act 1992. It does not come up that often but it needs to be explored a little more. I shall try to do so briefly but it is important—or at least I believe that it is.

The amendment seeks to insert a requirement for any relevant provider—for “relevant provider”, under the current circumstances noble Lords should read “Motability”—to provide governance reports to Parliament detailing certain matters. The amendment is important because the structure under which Motability provides its service is not straightforward; it is quite complicated. I am choosing my language carefully.

I make it clear at the outset that the Motability service has been absolutely invaluable to those whom it seeks to serve—namely, claimants who are eligible for the higher rate of the DLA mobility component and the enhanced rate of the personal independence payment. The leases for the cars, motorised wheelchairs, scooters and other devices that it provides are a lifeline for hundreds of thousands of our citizens.

Before I go into the questions that are on my mind, I ask the Minister in his response to perhaps take a moment to explain exactly what Clause 20 is seeking to do in terms of the mechanics of reclaiming the expenses of paying sums in respect of vehicle hire. It is a puzzle to me that we are only now getting round to this. The scheme has been in operation since 1977. I do not know how much expense is being reclaimed here, but we are using the 1992 Social Security Administration Act. Therefore, it occurs to me that if there were expenses that should have been recovered, perhaps the 1992 Act would have been the best place to put that, and not the 2015 Welfare Reform and Work Bill. I am told that it might be as much as £1 million. Is that £1 million a year? How is it being recovered? Can the Minister give us as much information as possible on how Clause 20 is designed to operate?

As I understand it, the department makes available to Motability, as a relevant provider, the details of those who have the eligibility qualifications for these two disability benefits in order that an offer may be made to them by Motability. Motability is a long-established charity run by very distinguished people and is subject to the normal rules and regulations of charities. It also has a secondary charity, although I am not quite sure what it is designed to do, called the Motability Tenth Anniversary Trust Ltd, and it has a relationship with Motability as a charity. So there are some complexities in the first line of the operation. I hope that the department understands this better than I do. I am trying to make sense of all the individual parts of the machinery that is put in place.

The charity certainly has substantial resources available to it. Otherwise, it would not be able to make the generous and important offer of transitional support schemes. It has made grants of £150 million and £25 million in the last two financial years respectively to try to take some of the pain out of the removal of eligibility at the higher rates for some of the clients who are being reviewed under the government policy of reviewing DLA and transitioning it into personal independence payments.

What I also struggle to understand is the relationship between the charity and the operations company, which is a private company that carries out the work on behalf of Motability. Page 86 of the latest annual report and accounts for 2015 records that, for the highest paid director, the aggregate emoluments in respect of qualifying services totalled £944,719. Colleagues might now begin to understand the extent to which these companies and charities have, one could say, blossomed and developed. They certainly have grown to an extent that is perhaps not widely understood. The restricted reserves of the operating company are in the region of £2 billion; the annual turnover is £3.9 billion; and the asset base is some £7 billion. So this is a very big business. It even has a rating from Moody’s and Standard & Poor’s as an A+ investment risk, and it regularly raises money on the bond market.

--- Later in debate ---

[Lord Freud]

I will have to write on that latter point. The funding for the £2,000 comes from Motability itself—the charity—as I understand it, based out of the reserves it has built up. It needs very substantial reserves because the risk in a leasing business is in the residuals, which can be very volatile, even though you are the biggest. You need very substantial reserves, but it took a view that it had some excess which it was prepared to spend in this way. I urge the noble Lord to withdraw his amendment.

[Lord Kirkwood of Kirkhope]

My Lords, the moment that the noble Lord, Lord Rooker, suggested to me that this was something worth looking at, I noticed that Motability Operations had set up a review of its remuneration committee’s decisions for its executives. The annual report, which has just been published, shows that it has merely tinkered with this. There was a real hope that it would respond to some of the external interest in what it was doing, yet it has come back with some tiny amendments to the remuneration package and increased the co-salaries in the way that I explained earlier.

I think that the Minister should tell his friends at Motability that Parliament is interested in this. It is in Motability’s interests to respond to the need to be more transparent and to be more assiduous in explaining what it is doing and why it is doing it. This will not go away; I will be standing shoulder to shoulder with the noble Lord, Lord Rooker, so the sooner we can get a modus vivendi whereby Parliament shows that there is an interest in engaging, the better that would be for Motability and for everyone else. However, I beg leave to withdraw the amendment.

Amendment 104AA withdrawn.