9:03 am, May 21, 2018
MPs HAVE attacked the ‘totally unacceptable’ £1.7 million pay of the boss of a business that supplies cars to people with disabilities.
Earnings and the £2.4 billion cash reserves being ‘hoarded’ by Motability Operations are ‘totally out of whack’ with the reality of its position in the market, two powerful Commons committees found.
Chief executive Mike Betts enjoyed a 78 per cent increase in his pay package in nine years – despite running a company that is a taxpayer-supported monopoly with zero competition, the probe found.
The work and pensions and treasury committees called for public spending watchdog the National Audit Office (NAO) to conduct a review of the scheme. Frank Field, chairman of the work and pensions committee, said: ‘It is impossible to calculate the human happiness that has resulted from the freedom and independence that Motability scheme – the first and only scheme of its kind – offers disabled people.
‘But the organisation operates as a monopoly that faces no competition in accessing disabled people’s often hard-won personal independence payment benefits.
‘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.
‘Its executives must co-operate with a full NAO investigation into the value it is offering the taxpayers who fund a significant chunk of its operations.’
MPs said the Motability scheme, made up of the operations business and two charities, was a valuable service and currently helped 629,000 disabled people live more independently.
But they said that while the people who lead it are clearly deeply invested in Motability’s honourable objectives, it was ‘difficult to square’ the high levels of executive pay and significant financial reserves it held.
Under the scheme, an individual’s mobility welfare payments are transferred to Motability Operations in return for a leased car, along with insurance, maintenance and roadside assistance.
The committees said potential rivals cannot compete with the company because it receives substantial tax breaks from the government that no other firm is entitled to, and does not face any competitive pressure when tendering for the contract to run the scheme.
‘Without any competitors on an equal footing, it is impossible to know whether disabled drivers would be able to access better loans elsewhere,’ the report said.
Motability Operations’ reserves have grown continuously for the past 10 years to £2.4 billion, and ‘given its privileged market position’ are out of proportion to the risks it faces, the committees found.
Its pay is benchmarked against FTSE 250 companies, but MPs said its unique status and income meant it was subject to few of the fundamental risks and challenges faced by such firms.
The firm could ‘well afford’ to reduce its prices or make very substantially higher charitable donations, the report said.
Nicky Morgan, who chairs the treasury committee, said: ‘It seems that Motability may have lost its way. DWP [the Department for Work and Pensions] should ask the NAO to carry out a full inquiry into the value for money of the Motability scheme.
‘This could help ensure that those who rely on the scheme are able to access it on the best-value terms.’
In a statement, Motability Operations – the charity behind Motability – said it welcomed that the report recognised the scheme provided an ‘extremely valuable service’ to disabled people.
A spokesman added: ‘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.
‘The National Audit Office will now look at the scheme – something Motability the charity and Motability Operations had made clear they would welcome before the select committees began their inquiry.’
Work and pensions secretary Esther McVey, pictured, put an urgent request into the NAO earlier this year for it to look into the Motability scheme.
A DWP spokesman said: ‘The Secretary of State 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.’
Picture by Ben Birchall/PA Archive/PA Images
MORE: National Audit Office to look into ‘huge cash stockpile’ at Motability Operations
On WorkshopMagazine.co.uk: Car parts boss given 12-year company ban after failing to deliver customers’ orders
