Chancellor Rachel Reeves has used the budget to target the Motability car leasing scheme, ending £300m a year in tax breaks and removing premium brands from the programme. The scheme, which leases around 300,000 vehicles annually to people with mobility problems, was described by Reeves as having been set up to protect the most vulnerable, not to subsidise the lease on a Mercedes-Benz. The changes include imposing insurance premium tax and charging VAT on advance payments for higher-value cars.
The move follows a right-wing online campaign, amplified on social media platforms including X, that falsely portrayed Motability vehicles as being offered free to disabled people. In reality, the cars are funded by disability benefit payments, topped up with recipients' own contributions. The campaign gained traction in tabloid newspapers and was echoed in speeches by Conservative leader Kemi Badenoch and Reform UK's Nigel Farage. Badenoch pledged to restrict Motability vehicles to people with serious disabilities, while Reform's Lee Anderson called the scheme an "absolute scandal" and suggested a return to blue three-wheelers.
According to the Times, the government initially considered a more drastic option of saving up to £1bn by applying VAT to the sale of Motability vehicles at the end of lease periods. However, sources say this was abandoned after the scheme's operator warned that the entire programme could collapse. Treasury insiders dispute that such a figure was ever considered, but acknowledge that civil servants had long identified the scheme as needing to be rebalanced.
Treasury insiders insist that the decision was not influenced by the online campaign, but other Whitehall sources say it is "not true" that the Treasury was unaware of pressure from the right to take action. Motability was seen as an easy target to "get a win on welfare" after the collapse of Labour's disability benefit cuts, according to these sources.
The furore was fuelled by the Motability Check website, which allowed people to search number plates for likely Motability cars, and by the anonymous Max Tempers social media account. The website, taken down since the budget, was accused of fuelling hostility against disabled people and relying on dubious data, according to experts.
