Lana Hempsall is a Policy Fellow at Onward, a County Councillor and founder and director of the Welfare Information Network, looking to raise awareness of the flaws and misuse of the welfare system.
The Motability scheme, which provides taxpayer funded vehicles to disabled people, has come in for increasing criticism over rapidly growing costs. In response, in the last Budget, the Chancellor announced changes to prevent luxury vehicles being offered. But that was never more than the most minor cosmetic adjustment, designed to deliver a quick positive headline while avoiding addressing the more fundamental problems with the current scheme.
Motability’s flaws do not start with the relatively small number of people who are driving BMWs or Mercedes. The problem is its sheer scale, cost and direction. Symptoms of a scheme that was designed with the best of intentions in the 1970s but which has grown far beyond its original purpose.
The scheme’s latest annual report lays this bare.
As of 30 September 2025, the Motability fleet has grown by 9.8 per cent in a single year to 890,000 vehicles. That is an extraordinary figure. Nearly one in five new cars sold in Britain now goes through this taxpayer funded scheme. In the past year alone there were 186,000 new applications including renewals, reflecting a 7.1 per cent increase in the eligible base of recipients of qualifying disability allowances.
Financially, the numbers are equally striking. Rental revenue, funded through taxpayer money, has risen to £3.464 billion, up from £2.806 billion the previous year. And yet despite generating more than £3.4 billion in income, Motability reported an operating loss before tax of £158 million.
Those aren’t the numbers of a marginal programme helping those unable to use traditional transport that Motability claims to be. Instead they tell the story of a vast, expanding leasing operation embedded within, and leaching off the benefits system and yet still making a loss.
But how is it possible for a scheme that is funneled customers by the government to be losing £158 million a year?
Part of the explanation lies in the rise in insurance claim expenses, increasing sharply from £491 million in 2024 to £655 million in 2025. However much of the blame lies with the additional services and products the scheme offers to participants. The annual report also highlights a series of one-off initiatives that Motability says were designed to help customers cope with the cost-of-living pressures in that year. including a £750 one off payment to 894,000 customers. But the taxpayers paying for this generous payment – which cost in total over £600 million – received no such financial support for them. In addition, Motability cars come bundled with insurance, servicing, road tax, breakdown cover and RAC membership – again, an option not available to other drivers at such a generous rate. That year, as part of its push to support net zero, the scheme also installed 28,000 home EV charging points last year at no extra charge.
Each of these elements may be defensible in isolation. Taken together, they demonstrate an almost willful negligence that for any normal business would spell the end of its senior leadership. Instead the operation continues to expand, and executives are paid as though they run a FTSE 100 powerhouse.
From March 2025, CEO Andrew Miller’s salary rose to £522,000, with bonuses taking his total package to roughly £924,000 including pension. The Chief Financial Officer’s total remuneration was around £766,000, while the Chair now receives £187,000. Even the lowest paid non-executive director received £58,000.
Is it any surprise then that many feel the Chancellor’s decision to remove luxury vehicles is barely scratching the service in tackling Motability’s failings?
At the heart of the issue, as with the wider welfare system, is the excessive eligibility of the scheme. Access to Motability depends almost entirely on receipt of the higher mobility component of Personal Independence Payment or Disability Living Allowance. As the number of people qualifying for those benefits has risen dramatically, particularly for those with mental health conditions, the fleet and costs have ballooned.
If the Government is serious about restoring Motability to its original purpose, it must look beyond brand marques. It must consider whether eligibility should be more tightly linked to severe physical mobility needs. It must examine whether vehicles should be replaced less frequently and whether the range should be more clearly capped at practical, cost-effective models, instead of simply banning a few “luxury” models. It must also consider whether executive remuneration in a scheme of this nature should be subject to closer oversight.
However, above all, it must confront the wider welfare dynamic driving this expansion. When disability caseloads rise rapidly among working age individuals, the consequences ripple across the entire system. Motability is just one of the most visible and politically sensitive manifestations of that growth, a visible demonstration of the confused, expensive mess that the welfare system has become.
Motability is a warning, showing that a system that expands without clear boundaries risks undermining its own legitimacy. Every pound spent extending generous car leasing packages to those who may not require them is a pound not able to be used for those with the most severe needs, or a pound added to a welfare bill that is already stretching the public finances.
Removing a handful of high-end models may quieten criticism in the short term. However it is not reform. It is appeasement.
If the Government was honest with itself, it would tighten eligibility, redefine the scheme’s mission and ensure that mobility support is targeted, sustainable and fair.
Until that happens, the fleet will continue to grow, the costs mount, and public confidence erode.
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