Motability

Lord Mann Excerpts

Thursday 8th February 2018 Commons Chamber

[John Mann (Bassetlaw) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on executive pay and cash reserves held at Motability.

[The Secretary of State for Work and Pensions (Ms Esther McVey)]

I am here today to address the concerns that have been raised about the structure of the Motability scheme. Let me first say that the scheme provides important support for more than 600,000 disabled people and has improved and extended its offer over the past few years. For example, in 2013, in my role as Minister for disabled people, I summoned the chief executive and chair to explain the excessive pay and bonuses of Motability scheme staff and the sums of money held in reserves. Despite being told that the charity needed such money for capital reserves, and the Charity Commission agreeing with that, I pursued the matter with the Department and ensured that the funds were used to benefit disabled people. The result was that £175 million was used for transitional support for claimants.

In April last year, after firm encouragement from the then Minister, my right hon. Friend the Member for Portsmouth North (Penny Mordaunt), Motability extended that transitional support. After direction from the Department, the charity is now piloting a Motability scheme to help children under the age of three who are not eligible for the mobility component of child disability living allowance but who rely on bulky medical equipment. The scheme has the potential to help up to 1,800 families.

I must emphasise that Motability is an independent charity that is wholly responsible for the strategic direction of the Motability scheme. It has oversight of Motability Operations, the commercial partner that operates the scheme under contract to the Motability charity. As a company, Motability Operations is an independent commercial business regulated by the Financial Conduct Authority. Although the remuneration of its directors and managers is a matter for Motability Operations to decide, from the outside one has to question whether it is really right. That view is endorsed by the Charity Commission, which said yesterday that the Motability trustees may wish to consider the reputational issues raised by the salaries being paid to its commercial partner’s executives.

Motability was set up 40 years ago, with cross-party support. It has done much good in that time, but today, anybody who looked at the size of the reserves and pay packages would question the direction that Motability has taken in allowing that to happen. Motability must listen to the criticisms it has faced, not only in the media this week but over the course of several years, and be receptive to change. As Secretary of State, I want to see a clearer commitment from Motability that it will maximise the use of funds to support disabled people’s mobility and independence.

As we have seen in so many instances, what was deemed correct in the 1970s is not necessarily correct by today’s standards. In the light of the current focus on corporate governance issues and the use of public money, I have today asked the National Audit Office to consider undertaking an investigation into this matter. I am keen for the NAO to look at how Motability is using taxpayers’ money.

[John Mann]

I thank you, Mr Speaker, for granting this urgent question, and the Secretary of State for her initial response.

It is grotesque that this registered charity, which is funded by the taxpayer through a direct grant from Government, is carrying cash reserves of £2.4 billion and has been underspending its budget by £200 million a year, and it is grotesque that this charity is paying its chief executive £1.7 million a year. Will the Secretary of State commit to an urgent review of executive pay at Motability and to publishing its results? Will she commit to urgently examining the finances of Motability and the audit arrangements made by her Department in previous years, and again, will she publish that review?

The point is that there is no risk; this is a no-risk situation. It is a very good scheme for the disabled, but there is no risk. The reserves are only half the picture—the banks are also profiting, possibly to the tune of billions over the years, because they are bearing some of the risk. Will the Secretary of State commit to reviewing the lack of competition in the financing arrangements with the banks, which see the large four banks making huge amounts of profit out of this scheme? How can the banks be allegedly covering the risk, when Motability has £2.4 billion in reserves allegedly to cover that risk? It is the same risk, yet in fact there is no risk at all because the taxpayer is guaranteeing the scheme.

Will the Secretary of State also make it abundantly clear to the disabled people in receipt of Motability that they need fear nothing and that the scheme and the service that they get will continue as is? What we as Members of Parliament are interested in is the finances behind the scheme, the excessive profits and the scandal that a no-risk scheme has banks profiting so much and the charity itself quite unnecessarily holding £2.4 billion in reserves.

[Ms McVey]

First, I thank the hon. Gentleman for his work and for his courage in pursuing the matter. I also thank the media for exposing the situation. Now that I am back in the House as Secretary of State for Work and Pensions, I can say that the situation needs to come under the spotlight. I would like to work with him on that, to bridge the divide of party politics and do what is right. We need to uncover what is happening in the Motability scheme and to ensure that the money held in the company’s reserves goes to the people that it should be supporting. He quite rightly says that having such an amount of money in reserves is grotesque, and that it should really be going to support disabled people.

As for where we go next, an urgent request has gone to the National Audit Office to ensure that if disabled people choose to spend money on the Motability package, that is a good use of the benefits that they get, and to check how taxpayers’ money is being used. Motability has been a lifeline for many disabled people who have chosen to take part in the scheme. As I have said, it is helping more than 600,000 people, and we must not throw the baby out with the bathwater. For those whom the scheme is helping, it is an essential lifeline, but if it could be helping many more disabled people then that is exactly where the money should be going.