Motability: it’s other peoples’ money

Motability has been criticised again by the House of Commons Work and Pensions and Treasury Committees at evidence taken on 9 January. This follows publication of the recent report by the National Audit Office (NAO) which broadly endorsed the criticisms of executive pay, reserves and governance. Senior figures in both the Motability Charity and its commercial arm Motability Operations say they accept all the NAO recommendations - while appearing at the same time to justify all their actions. Some words used by MPs included “evasiveness”, “lack of transparency”, “defensiveness”. NAO’s head, Sir Amyas Morse, concluded his evidence by saying “there does need to be change”. 

Three observations: Firstly, risk management is fundamental to the business, and Motability Operations makes much of its “dynamic and robust approach” to managing risks (lots more like this screenshot in the Annual Report). So how didn't it spot the very obvious reputational and political risks currently resulting from its remuneration and reserves policies? They were surely not hard to foresee…

Secondly, much of Motability Operations’ justification for the levels of executive pay was made on the grounds that it is a complex business. The CEO was apparently paid £360,000 ‘retention payments’ in addition to long term incentive payments likely to exceed £2 million (which were only recently revealed to MPs). However, as a monopoly, Motability has no competitors; it has one principal source of income (disabled peoples’ benefits) which is in effect guaranteed; it has a single principal business activity (car leasing) and it operates solely in the UK. In essence it is a very simple business - it is big, certainly, with a turnover of over £4 billion - but that is not the same as complex.

Finally, from listening to the evidence of Motability representatives, there appears to be no real awareness whatsoever that the money it accumulates as a surplus is disabled people’s money. All the money in the system - including the assets of around £3 billion between the different  Motability organisations - derives from the disability benefits of individuals. Motability Operations really has no business collecting more from its customers than it needs, whether this is passed on to the Motability Charity or not; it’s other peoples money, not theirs.