UK (Parliament Politics Magazine) – Chancellor Rachel Reeves plans to ban luxury cars for benefit claimants by reforming the Motability scheme to curb taxpayer-funded “premium perks.”
As reported by The Telegraph, Rachel Reeves will move to stop welfare recipients on sickness benefits from obtaining taxpayer-subsidised luxury cars, as part of efforts to tighten welfare control.
How does Rachel Reeves plan to reform the Motability scheme?
Rachel Reeves is set to announce major changes to the controversial Motability scheme amid concerns it has become “unfair” to taxpayers.
She plans to end access to luxury brands like BMW and Audi, including premium insurance and roadside assistance.
The Chancellor warned that Motability is providing “a premium motoring experience subsidised by taxpayers,” beyond the reach of many working families.
The programme has sparked controversy amid reports that beneficiaries with conditions such as anxiety and ADHD have accessed luxury vehicles.
The measure aims to signal that Labour remains committed to welfare reform despite pushback from backbench MPs.
The Motability scheme allows PIP and other disability recipients to use their payments to lease a new vehicle. Those who receive the higher-rate PIP, £187.45 per week, have the government transfer their funds directly to Motability.
The programme provides a full package, including insurance for three drivers, domestic and international breakdown cover, road tax, and maintenance.
The least expensive models can be leased with no upfront payment, while top-end cars may require up to £7,999.
The scheme has come under scrutiny after reports that beneficiaries with conditions such as ADHD and anxiety accessed high-end cars.
What did the Treasury source say about Rachel Reeves’ Motability reforms?
A Treasury source said the Chancellor is concerned that Motability has drifted from its original purpose, rather than focusing on essential mobility.
They argued Rachel Reeves remains dedicated to beneficiaries who need the scheme most, though only 10% of Motability vehicles are adapted.
The source stated,
“This goes far beyond providing essential mobility for disabled people and is instead offering a premium motoring experience subsidised by the taxpayer.”
It added,
“The Chancellor’s focus is tackling unfairness in the scheme, such as the availability of premium vehicles, while ensuring it continues to support disabled people.”
What did Peter Kyle say about Labour and austerity?
A senior cabinet minister said Rachel Reeves’ move to increase spending is expected to benefit the economy.
Business Secretary Peter Kyle pledged there would be no return to austerity ahead of a tax-raising Budget.
He explained Britain’s economy has been scarred by austerity, Brexit, and the pandemic, but remains intact.
According to him, the nation must avoid returning to failed austerity policies.
Mr Kyle said,
“It also means that, as we strive to drive up stagnant productivity since 2010, investment in our NHS, roads, rail, energy and defence that grows the economy and supports good jobs must be our solution.”
Referring to Tory leader Kemi Badenoch, he stated,
“Kemi Badenoch has been Conservative Party leader for a year and in that time she has utterly failed to convince either her own party or the public that they have learnt lessons from 14 years of failure.”
The business secretary said,
“It is time for the Conservatives to come clean on exactly where they would swing the axe.”
He questioned,
“Would they means test the state pension and scrap the triple lock, something they have repeatedly and pointedly failed to rule out? Would they cut vital funding for schools, hospitals or policing? Would they recklessly borrow like [Liz] Truss did?”
What did the latest figures reveal about Motability leases?
The recent figures show that around 50,000 luxury cars from BMW, Mercedes-Benz, and Audi are leased under the Motability programme.
The increase in leased vehicles mirrors a rise in sickness benefit claims, particularly for mental health, since the pandemic.
Ministers revealed that Motability received £3.1bn in taxpayer support last year, a 10% increase from the previous year.
The Chancellor is reportedly considering the removal of Motability’s VAT and insurance exemptions to recoup £1bn, but officials said no final decisions have been made.
Officials said changes to the scheme would apply only to new leases, while existing agreements remain unaffected.