Campaigners have sent a letter to Chancellor Rachel Reeves amid concerns over a potential major change to the scheme in this week’s Budget. The Motability scheme enables personal independence payment recipients with serious mobility difficulties to lease a new car, as long as they qualify for the higher mobility rate of the benefit.
Chancellor Rachel Reeves is understood to be examining potential modifications to the programme in the Budget this week, amid reports that certain claimants have been able to lease premium vehicles including Mercedes and BMWs. And one change is possible plans for slapping VAT on people buying cars through the Motability scheme will add £3,000 up front costs for the disabled. Motability said introducing VAT for Motability vehicles ‘would raise costs sharply and exclude many from the freedom and independence the scheme provides’.
The new Motability Campaign Collective, which is led by Transport For All and which Disability Rights UK is part of, has sent a letter to the Chancellor voicing concerns over reported threats to cut the Motability scheme. The Motability Scheme, which started in 1995, offers an affordable way for Disabled people, who are recipients of Personal Independence Payments, to lease a car, including wheelchair-accessible vehicles, scooters or powered wheelchairs.
Reports are that Rachel Reeves is considering removing the VAT exemption on Motability vehicles and or ending access to high-end cars, as well as some forms of insurance and breakdown cover.
The letter sent to the chancellor states that removing the VAT exemption on adapted vehicles would cause disabled people to pay thousands extra in advanced payments for vehicles noting that the VAT Act 1994 (Schedule 8, Group 12, Item 14) exempts VAT on vehicles used by disabled people. The letter also states that any cuts to Motability would increase concerns around widening inequality and harm to the Disabled community.
The Motability Campaign collective letter states that: “Conversations around Motability have unleashed rhetoric that fuels hostility towards disabled people and risks making our lives less safe.
“Disabled people are already being questioned, challenged, and harassed in public for using accessible parking spaces or vehicles. Turning vital mobility support into a political talking point normalises that hostility and creates the conditions for hate crime.
“Far from saving money, these cuts would reduce workforce participation, increase demand for health and social care, and cost the economy billions in lost productivity. Any government committed to equality and growth should be removing barriers, not building new ones.
“There must be no changes to the Motability Scheme in advance of the PIP Review recommendations including in the November Budget 2025. Any future decisions should be based on full consultation and co-production with disabled people.”
Rachel Reeves is planning to restrict disabled people’s access to cars through the benefits system in a bid to save £1bn, it has emerged. The chancellor is reportedly considering reforming the Motability scheme in a bid to save money and boost public confidence in the welfare system.
It comes as the chancellor has been warned by the Institute for Fiscal Studies that she needs to find at least £22bn of tax hikes or spending cuts in her November Budget in order to avoid a financial “groundhog day”. The Motability scheme provides cars to around 815,000 users, including around 40,000 luxury vehicles. It is open to people who claim a qualifying mobility allowance, most commonly through the personal independence payment (PIP).
But it has come under fire in recent months, and formed a major part of Kemi Badenoch’s speech at the Conservative Party conference, with critics claiming online “sickfluencers” are teaching people to game the system in order to claim free cars.
In her speech in Manchester, Ms Badenoch said: “Those cars are not for people with ADHD. TikTok videos tell you how – and some people even pay for VIP services to boost their chances of a successful benefits claim.”
Disability groups slammed the proposed changes, saying they would make life more expensive for those with serious health conditions.
It currently costs taxpayers £2.8bn, and sees a portion of a claimant’s disability benefits spent on a new car.
Emma Vogelmann, co-chief executive of the Transport for All disability group, said public transport is “often unusable” for disabled people, with broken pavements and “non-existent bus routes”.
“A Motability car changes that – it allows us to work, shop, and do the school run. Scaling back the scheme would lock disabled people away from daily life. Does the chancellor want to take away our freedom?” she said.
A Treasury spokesperson said: “We do not comment on speculation around changes to tax outside of fiscal events.”