The cost of the Motability scheme has risen by almost £275 million since Labour entered government, according to new figures. The scheme, which accounts for more than one in five new cars sold in Britain, saw its cost increase by nearly 10 per cent from £2.8 billion to £3.074 billion last year.
The increase comes as Chancellor Rachel Reeves considers targeting the scheme to save over £1 billion in the upcoming Budget. Reeves is reportedly eyeing the VAT exemption on Motability cars as she seeks to fill a £30 billion hole in public finances. The scheme allows disability benefits claimants to exchange their mobility allowance for a new car, with users also exempt from VAT and insurance premium tax.
Shadow work and pensions secretary Helen Whately criticised the spending, saying it has 'spiralled out of control under Labour'. She added: 'Ministers have shown they are completely unable and unwilling to seriously reform the system, meaning taxpayers are footing an ever-increasing bill.' Whately pledged that Conservatives would fix the scheme by ensuring only genuinely disabled people get vehicles and ending subsidised cars for conditions like ADHD and tennis elbow.
The Department for Work and Pensions (DWP) does not directly fund Motability, but the scheme receives the direct transfer of benefit from DWP. In a written parliamentary question, disability minister Sir Stephen Timms confirmed that the total value of benefits transferred to Motability in the 2024–2025 financial year was £3,074,920,421.67.
A DWP spokesman said: 'Motability is independent of government and is wholly responsible for the terms and administration of the Scheme. The scheme comes at no additional cost to the taxpayer, and customers claiming benefits such as PIP must use some of their existing payment to lease a car.'
