Whilst the whole Motability & Motability Operations setup might be technically & legally described as a charity / not for profit affair, we all know that the reality is very different. After a long career in the commercial world, I spent the end of my career before retirement in the real charity / not for profit arena. Generating income was always a challenge and, other than the recommended reserves of 6-12 months operating costs, all income was spent on the needs of those who used the charity. This is pretty much the norm for most charities. Also, most CEO’s of even household named charities earn in the region of £100-150k, even though they manage thousands of staff and hundreds of millions of pounds of turnover and are rarely in monopoly situations. As we know, none of these challenges apply to Motability. They are a monopoly. They do not have to fight for income. They are not susceptible to ‘bad years’ when, for example, gifts in wills are very low (a massive issue for real charities). The CEO of this monopoly has a total remuneration package of over £1m. Also, when you pay even your most junior staff a pay and benefits package that is considerably above the norm for the private sector, never mind the third sector, then it is no wonder that there isn’t a big ‘profit’ left at the end to distribute! As I have often said, the fact that this gilt edged remuneration package is paid for by disabled people’s benefits is morally wrong on so many levels. It’s interesting to read about the huge sum of surplus funds that have been transferred to the ‘charity’. What are they doing with that money I wonder? Given that all that money has been generated by, let’s face it, excessive AP’s (they make several hundred pounds profit per lease), how can it be that AP’s are rising considerably and customers are now being charged for essential adaptations that were previously free? I was hoping that the arrival of a new CEO might result in some improvements, but he’s nearly a year into his role now and it’s got considerably worse, not better. Many of the issues that I have raised in this post were highlighted in the government sponsored review into Motability, but were ignored. Finally, it’s all very well saying “if you don’t like it, vote with your feet and leave”. Some of us have the means to do that, but many don’t.
For those advocating that Motability and Motability Operations should lose its ‘single supplier’ and/or charitable status (due to its profits build up etc), how would you feel if a ‘normal’ company where to take over lock, stock, and barrel?
Don’t forget a ‘normal’ company (of the size needed to run such a scheme) needs the stability, expertise, liquidity and capital reserves to both run the scheme ‘day to day’ and to ‘weather any storm’. It would most likely be of ‘PLC’ size and structure (such as other large commercial leasing companies).
Thus, their structure means that profits generated are not returned to the scheme, but to its shareholders (why invest in any company if there is no return?). The shareholders will mainly be the corporate fund holders/markets/hedge funds, pension funds and maybe to a very limited degree private investors (you would need a CREST to buy the shares directly, unless held by/in a nominee account in which case, the nominee rather than the actual shareholder holds the voting rights etc). So, the individual doesn’t have influence to change how the company runs etc. Many corporate investors would be foreign to boot.
For example, look at Lex Auto Leasing. Mainly owned by Lloyds Banking Group. The same Lloyds Banking Group ‘rescued’ by the British taxpayer during the financial crisis. Then sold off – not to individual ‘tax paying’ people, but to the international corporate fund markets.
It would be like turkeys voting for Christmas for corporate investors/fund managers /pension funds etc (and, god help us, hedge funds) to forego profits, dividends and other windfall payments (which the current Motability Operations plough back in). All they look for is the maximum return on the investment for them and their clients (and the bigger the return, the bigger their cut as well)!
Profit will be king! Can you honestly see such as Advance Payments being reduced in this situation? Like most things, service becomes a race to the bottom – look at what is happening in the energy sector now!
So, which would you rather have? Motability, generating profits which are returned to the overall scheme? Or the scheme operating company paying its profits to what most people would refer to as ‘fat cats’?
How would you really feel about your ‘mobility monies’ going to shareholders – many of which would probably be overseas investors anyway?
Be careful what you wish for!