Campaigners have warned Chancellor Rachel Reeves over reported plans to reform the Motability scheme which provides cars to around 815,000 disability benefit users
Campaigners have penned a letter to Chancellor Rachel Reeves expressing concerns over potential significant changes to the Motability scheme in this week’s Budget. The Motability scheme allows recipients of personal independence payments with severe mobility difficulties to lease a new car, provided they qualify for the higher mobility rate of the benefit.
Chancellor Rachel Reeves is believed to be considering potential alterations to the programme in this week’s Budget, following reports that some claimants have been able to lease luxury vehicles such as Mercedes and BMWs. One possible change could see VAT imposed on individuals purchasing cars through the Motability scheme, adding an upfront cost of £3,000 for disabled people.
Motability has stated that introducing VAT for Motability vehicles “would raise costs sharply and exclude many from the freedom and independence the scheme provides”.
The newly formed Motability Campaign Collective, led by Transport For All and including Disability Rights UK, has sent a letter to the Chancellor expressing concerns over reported threats to cut the Motability scheme.
The Motability Scheme, established in 1995, offers an affordable means for disabled individuals, who are recipients of Personal Independence Payments, to lease a car, including wheelchair-accessible vehicles, scooters or powered wheelchairs.
Reports suggest that Rachel Reeves is contemplating the removal of the VAT exemption on Motability vehicles, potentially ending access to high-end cars, as well as certain types of insurance and breakdown cover, reports the Mirror.
A letter addressed to the chancellor indicates that removing the VAT exemption on adapted vehicles would result in disabled individuals paying thousands more in advance payments for vehicles. It notes that the VAT Act 1994 (Schedule 8, Group 12, Item 14) exempts VAT on vehicles used by disabled people.
The letter also highlights that any cuts to Motability would heighten concerns about increasing inequality and harm to the disabled community.
The collective letter from the Motability Campaign states: “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 reportedly planning to limit disabled people’s access to cars through the benefits system, aiming to save £1bn. The Chancellor is said to be considering reforming the Motability scheme as a means to save money and enhance public confidence in the welfare system.
This comes as the Chancellor has been cautioned by the Institute for Fiscal Studies that she needs to identify at least £22bn of tax increases or spending cuts in her November Budget to avoid a financial “groundhog day”. The Motability scheme provides cars to approximately 815,000 users, including around 40,000 luxury vehicles.
It is available to individuals who claim a qualifying mobility allowance, most commonly through the personal independence payment (PIP). However, it has faced criticism in recent months, and was a significant part of Kemi Badenoch’s speech at the Conservative Party conference, with critics alleging online “sickfluencers” are instructing people how to exploit the system to claim free cars.
In her speech in Manchester, Ms Badenoch stated: “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 have criticised the proposed changes, arguing that they would increase costs for those with serious health conditions. The current scheme costs taxpayers £2.8bn and involves a portion of a claimant’s disability benefits being used to purchase a new car.
Emma Vogelmann, co-chief executive of the Transport for All disability group, highlighted that public transport is “often unusable” for disabled individuals due to issues such as damaged 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 questioned.
A spokesperson for the Treasury responded: “We do not comment on speculation around changes to tax outside of fiscal events.”
