Esther McVey blasts Motability bosses
Tatton MP and secretary of state for work and pensions, Esther McVey has asked the National Audit Office (NAO) to investigate Motability Operations - the company which provides cars for disabled people through the Motability Scheme.
Her announcement today follows a recent report stating that the Motability Scheme had billions of pounds of taxpayer’s money in its accounts and was paying ‘eye watering’ amounts to its executive team.
In her role as secretary of state for work and pensions, Ms McVey said she expected money to be used to benefit disabled people not to sit in bank accounts or be paid in excessive wages.
Ms McVey made the comments after a national newspaper revealed that Motability has built up £2.4 billion in surplus over recent years and pays its chief executive £1.7million a year.
Ms McVey said: “I want to see a clearer commitment from Motability to maximise the use of funds to support the mobility and independence of disabled people.
“The scheme set up in the 1970s has done so much good for so many disabled people, but anyone looking at the size of the reserves and these pay packages would question the direction Motability has taken in allowing this to happen.”
She added: “Motability must listen to the criticisms it has faces and be receptive to change.”
In response, Motability issued a statement saying: “Founded in 1977, Motability has always embraced public accountability and transparency, so we warmly welcome a NAO review and any wider scrutiny from Parliament – as we did when the Charity Commission undertook a full review of the scheme last year.”
The statement continued: “In the course of the short parliamentary debate earlier today [Thursday 8th February] a significant number of incorrect statements were made about the Motability Scheme.
“We will be writing to the Secretary of State, and others who participated in the debate, refuting every single inaccuracy.”
Motability said that its first priority is always to its disabled customers. The statement then made the following points:
1) The £2.4 billion reserves are not held by the charity. They are held by Motability Operations, an independent company which is contracted to deliver the Motability Scheme on the ground.
2) Motability has no role in the eligibility criteria or award of mobility allowance to disabled people. That is – and always has been – the DWP’s role.
3) Motability does not receive a direct grant from government for the scheme. The Motability Scheme does not rely on government, or the taxpayer, for direct funding. It was set up so that disabled people could voluntarily choose to use their mobility allowance on the leasing of a vehicle to meet their needs.
Acknowledging that Notability Operations is an independent, commercial, FCA-regulated business, Ms McVey concedes that the pay of its directors is a matter for the firm, however added: “One has to question from the outside whether this is really right.”
Ms McVey said: “We have seen in so many instances what was deemed correct in the 1970s is not necessarily correct by today’s standards and with the current focus on corporate governance issues and the abuse of public money I have today asked the NAO to give consideration to undertake an investigation into this matter.
“I would be keen for the NAO to look at how taxpayer’s money is being used by Motability.”
The Motability Scheme, operated by Motability Operations, allows disabled people to lease cars, wheelchairs or scooters in return for part of their state disability allowance.
Motability Operations said that the quoted figure of £2.4 billion is not held as cash and is instead used to buy cars for disabled people.
The company said this reduces the amount of borrowing required, and also underpins the Motability Scheme’s financial stability, protecting it from the business risks it faces - for instance in relation to used car values.
The Charity Commission stated earlier in the week: “We consider the level of operating capital held by the company in order to guarantee the scheme to be conservative”.
Motability Operations Group is, however, not a charity and therefore does not come under the Charity Commission’s jurisdiction.
In addition, the remuneration of Motability Operations’ directors is decided by the Motability Operations’ board, based on the advice of their remuneration committee.
They say that remuneration is reviewed against the market to ensure that it is both competitive over the long term, and to ensure that any rewards are related to performance
The Charity Commission statement said: “It is not for the Commission to comment on the pay of the CEO of a large non charitable commercial company.
“However, we have made clear to the trustees of the charity Motability that the pay of the CEO of its commercial partner Motability Operations may be considered excessive and may raise reputational issues for the charity. These reputational issues are for the trustees to manage.”
The statement added: “We also made clear, following the conclusion of our review last year, that we consider the level of operating capital held by the company in order to guarantee the scheme to be conservative, and agreed with the charity, as part of its oversight of the scheme, that it would ensure this this matter is kept under continuous review.”
Beyond this, they said, “there is no further role for the Commission as regulator at this time.”
It’s not the first time the MP has had a run-in with the Motability Operations Group.
In her previous role as disability minister in 2013, Ms McVey summoned its chief executive to answer question about pay and reserves, which resulted in £175 million being used in transitional support for claimants.