The £8 Billion Disability Car Scheme Nobody Wants to Question

While the government claims it cannot afford winter fuel payments for pensioners, a government-backed monopoly spent £8.1 billion last year buying brand-new cars for welfare claimants - £1 billion more than the entire prisons budget. The Adam Smith Institute’s forensic examination of the Motability scheme reveals how a 1970s initiative to help wheelchair users has morphed into an unaccountable behemoth purchasing one in five new cars sold in Britain.

The Numbers They Don’t Want You to See

Matt Ryder, former head of Motability policy at DWP, has broken ranks to expose what insiders already know: the scheme wastes £3.4 billion annually by insisting on brand-new vehicles when second-hand cars would serve the same purpose. This isn’t rounding error money - it exceeds the entire school maintenance and repairs budget.

The scheme’s 860,000 customers receive a new car every three years, comprehensive insurance, servicing, MOT, breakdown cover, maintenance, replacement tyres, and windscreen replacement. Many can afford luxury vehicles like the Mercedes-Benz CLA Coupé (£44,915) or Alfa Romeo Tonale (£38,660) with additional payments. Meanwhile, three-quarters of British motorists buy second-hand, and the average UK car is now ten years old - up three years in the last decade.

But here’s what reveals the true dysfunction: 85% of Motability users make additional payments from their own savings for more expensive vehicles, proving they have disposable income. Many own second vehicles outside the scheme, though DWP refuses to publish these statistics. Less than half of customers report traveling more as a result of having the car. Only one in five cite improved job opportunities.

The Gateway Has Been Blown Wide Open

Enhanced-rate PIP mobility claims - the primary route to a Motability car - have surged 80% in five years. The explosion is driven by mental health claims for anxiety and depression, despite PIP being explicitly designed to exclude these conditions from Motability eligibility. The “planning and following journeys” criteria meant for blind people now captures anyone claiming psychological distress. The “moving around” criteria for wheelchair users has been stretched through judicial interpretation to include those who walked across Leeds to their tribunal hearing.

Matt Ryder confirms what disability assessors whisper: people with acne, tennis elbow, writer’s cramp, and drug and alcohol problems qualify for brand-new cars at taxpayer expense. The reliability criteria - originally minor modifications to help genuinely disabled people - have become loopholes. Claimants need only prove they cannot walk 20 metres “repeatedly” or “to an acceptable standard” on most days. The assessment often happens by phone.

A Monopoly Answerable to No One

Motability operates in a governance vacuum that would be unthinkable in any other sector handling billions in public money. The charity holds £4 billion in reserves - far exceeding commercial requirements - plus £1.2 billion in cash. The CEO collects £748,000 annually. Performance targets are self-set and easily met. DWP has no voting position on the board. The National Audit Office can only review it if Motability agrees. Freedom of Information requests don’t apply.

The Byzantine structure reveals deliberate obfuscation: Motability the charity contracts with Motability Operations, a separate company owned by four banks. DWP’s relationship is only with the charity, completely shielding operations from oversight. When Select Committees investigated excessive executive pay, Motability claimed the charity couldn’t influence the operations company - despite sharing the same name and the charity being entitled to all reserves on wind-up.

Unlike rail franchises that face competitive tenders and regulated pricing, or utilities overseen by dedicated regulators, Motability’s name is written directly into legislation. The Social Security Regulations 1987 grant it exclusive rights to direct benefit payments. HMRC provides bespoke VAT and Insurance Premium Tax reliefs worth £1.2 billion annually - reliefs worded to ensure only Motability can claim them.

The Political Protection Racket

Every attempt at reform dies the same death. The National Audit Office has investigated four times since 1996, each time finding the same problems, each time ignored. Select Committees make recommendations that disappear into Whitehall. When the Coalition government introduced PIP to replace DLA as part of austerity, the new benefit became easier to claim than the one it replaced - particularly for Motability access.

The scheme has created its own political constituency. Taking away someone’s Motability car is more politically toxic than reducing their benefits. Disability charities that should scrutinize waste instead defend the status quo. The Conservative government that preaches fiscal responsibility exempts this £8 billion scheme from cuts. Labour, preparing for power, won’t touch it.

Treasury officials know the truth: the scheme’s VAT relief alone has ballooned from £96 million when introduced at 8% VAT to over £700 million at today’s 20% rate, with no value-for-money assessment. When Motability was founded, the mobility allowance wasn’t enough for a basic car. Today’s enhanced PIP mobility payment of £77.05 weekly covers a Toyota Yaris Icon (£22,445 retail) with comprehensive benefits - yet still receives billion-pound tax subsidies on top.

What This Really Reveals

The Motability scandal exemplifies Britain’s governance crisis: well-intentioned schemes captured by vested interests, expanding beyond recognition while accountability mechanisms fail. A program to help the genuinely disabled access basic transport has become a middle-class benefit scheme providing luxury vehicles for those with anxiety and back pain.

The Adam Smith Institute’s solutions are straightforward: end the £1.2 billion tax reliefs, tighten eligibility criteria to original intentions, and break Motability’s monopoly through competition. These reforms would save billions while still ensuring genuinely disabled people receive appropriate support.

But they won’t happen. Not because the evidence isn’t clear or the waste isn’t obvious, but because British governance no longer functions on evidence or efficiency. It operates on political management - avoiding difficult decisions, protecting established interests, and hoping nobody looks too closely at the numbers.

The same pattern repeats across the public sector: schemes that start focused become bloated, oversight bodies that should scrutinize become captured, and politicians who should reform instead defend the indefensible. The Motability scheme isn’t an aberration - it’s a £8 billion annual reminder that British institutions no longer work for the people who fund them.

When a government that claims it cannot afford winter fuel payments simultaneously facilitates £3.4 billion in waste on brand-new cars for claimants with anxiety, you’re not looking at policy choices. You’re witnessing institutional decay in real-time. The Motability scheme will celebrate its 50th anniversary next year, bigger and less accountable than ever.

In functioning democracies, this report would trigger immediate reform. In declining Britain, it will be buried under process, deflected through committees, and forgotten within weeks. The cars will keep rolling off the forecourts, the billions will keep flowing, and nobody with power to change it will ask the obvious question: how did we let this happen?