Chancellor Rachel Reeves is planning to target the disabled in next month’s Budget by scrapping tax breaks on cars through the controversial Motability scheme.
The scheme – which accounts for more than one in five new cars sold in Britain – allows those on some disability benefits to use them to buy a car or another vehicle but it has been mired in controversy over accusations it is being abused.
Critics have said the bar is far too low for qualifying for access to it and also slammed the thousands who have used Motability to buy discounted luxury cars.
Reports have suggested that people suffering from constipation, tennis elbow, ADHD and anxiety have previously qualified for help under the scheme.
Reeves is said to be eyeing up the scheme, which scraps VAT for those benefiting from it, for a potential £1bn saving to the economy as she looks to balance the country’s books.
But there is said to be nervousness in government about targeting those perceived to be the most vulnerable in society after the previous Labour backbench revolt about planned £5bn benefit cuts.
In response to growing public disquiet about abuse of the scheme, Tory leader Kemi Badenoch told her party’s conference last week that she would restrict Motability to people with ‘serious disabilities’ and ‘not those with ADHD’.
Currently Motability’ costs the taxpayer £2.8bn a year with its 860,000 users exempt from paying VAT or insurance premium tax on their leased vehicles. Use of the scheme has exploded by a third since 2017 with one in five new cars sold in Britain now purchased under it.
Chancellor Rachel Reeves is planning to target the disabled in next month’s Budget by scrapping tax breaks on cars through the controversial Motability scheme
According to The Times, Reeves is considering drastic reforms which will reduce an exemption by which drivers of cars leased under the scheme do not have to pay VAT or insurance premium tax.
She may also restrict the scheme to remove luxury brands including BMW and Mercedes which are available for the tax breaks under it. More than 40,000 benefits claimants are currently using Motability to give them access to such high-end cars.
The Treasury has played down suggestions that the Chancellor will target the disabled, telling Radio 4’s Today programme that they ‘would not comment on speculation’ and say no final decision has been taken.
Charities have said the move would ‘heap extra costs onto disabled people across the country’.
Scope’s James Taylor warned: ‘Restricting eligibility to Motability could hit disabled people on lower incomes hard.’
Defending any possible cuts to the benefits system, Reeves told Channel 4 News that the government ‘could not leave the welfare system untouched’.
Motability cars can be leased by benefits claimants who receive an enhanced rate for qualifying mobility difficulties (file photo)
‘We can’t get to the end of this Parliamentary session and I’ve basically done nothing. We have to do reform in the right way and take people with us,’ she said.
Earlier this year, Motability boss Andrew Miller was forced to deny claims it had become a ‘racket’ after a Daily Mail investigation revealed it was sitting on a surplus of £4 billion while its charitable arm was holding £1.7 billion in cash yet to be handed to good causes.
This newspaper’s exposé revealed it enjoys a turnover of £7 billion – accrued from the state benefits it receives plus revenue from the sale of used cars on the second-hand market – with its customer base growing 15 per cent last year because of the boom in those claiming disability benefits.
