MPs have called for an overhaul of the management of the Motability car leasing scheme for disabled drivers after concerns were raised over its “totally unacceptable” pay for top executives.

Two select committees – Treasure and work and pensions – say the £1.7m earned by the scheme’s chief executive, Mike Betts, in 2017 was unjustifiable at a monopoly provider effectively sustained by public money.



They accuse Motability for maintaining £2.4bn of financial reserves, which they argue is unnecessary and out of proportion to the potential risks faced by the scheme.

“It is difficult to square the high levels of executive pay and significant financial reserves at Motability Operations, the company that runs the scheme, with its charitable objectives and the wider context of pressures on welfare expenditure,” the MPs report says. “Motability badly needs a new road map for how it manages the scheme’s finances.”

Motability now faces an investigation by the government spending watchdog the National Audit Office into whether its top pay levels deliver value for money and whether its monopoly over car leasing to disabled people should be broken up.

“Motability provides an extremely valuable service to disabled people. That should not however exempt it from scrutiny,” the report says.

Barclays, HSBC, Lloyds, and RBS, the four high street banks that finance the Motability leasing arm are also criticised for making “significant profits from a virtually risk-free investment in a charitable scheme”. They rake in guaranteed payments of more than £700,000 each year from Motability.

The scheme enables disabled people to lease adapted cars by using by their enhanced mobility disability benefits – either disability living allowance (DLA) or its successor, personal independence payment (PIP). It currently helps 629,000 people, many of who would otherwise struggle to afford a vehicle.

Although Motability does not directly receive public funds, it is dependent for nearly half of its income on £2bn a year of disability benefits redirected by the Department of Work and Pensions on behalf of claimants. It also received £750m in tax breaks through exemptions from VAT and insurance premium tax.

Political and media concern over Motability’s top pay levels in recent months has been accompanied by anger that 75,000 disabled people – 43% of Motability clients – have been forced to return lease cars after being re-tested when moving from DLA to PIP.

MPs are scathing about Motability’s justification that the amount paid to Betts – up 78% in nine years – was in line with similar roles at comparable FTSE 250 businesses. The report points out that, as a state-supported monopoly, the scheme faces no competition, no shareholder pressure or credit risks.

Frank Field, who chairs the work and pensions committee, said: “The levels of pay pocketed by its executives and the cash reserves it is hoarding are totally out of whack with reality of its position in the market. That one member of staff is paid over 10 times what the prime minister earns, is one example of where Motability needs to get a grip of itself and realise the privileged position in which it trades.”

The report takes issue with Motability’s claims that increasing its reserve levels by 328% since 2008 was necessary to insulate against the risk of used-car values plummeting. It calls on the scheme to take steps to reduce reserves by cutting prices to customers or making higher donations to charities.

Motability said it welcomed the NAO investigation and noted that the report said it provided an extremely valuable service to disabled people: “This reflects our priorities of always providing outstanding customer service, value for money, sustainability, and putting disabled people and their families on the road to freedom.”

Nicky Morgan, the chair of the Treasury committee, said Motability was a valuable service that appeared to have lost its way: “Such high levels of executive pay and significant financial reserves are difficult to square with the honourable objectives of the scheme.”

The Department for Work and Pensions said: “The secretary of state [Esther McVey] has stated that Motability provides an extremely valuable service to disabled people but the levels of executive pay and financial reserves are concerning. Following her intervention, she is pleased agreement has now been secured for the NAO to look into this.”