The misconception here i believe is that some people seem to think that Motability Operations is owned by the Government/Taxpayer, and therefore they/ we have a say in how the business is run, whereas in truth, it is owned by four banks and it is a business, which exclusively provides services for the disabled. It is basically the delivery vehicle for the National Motability Scheme, and its performance is overseen by Motability Foundation, a charity, & Just like it is with any other business , it is prudent to make a profit , to ensure the future and to cover the present, including the unexpected! However, unlike other businesses, it has ‘some ‘ advantages regarding VAT and other business related taxes, due to it’s customer base, but it is not funded by the Taxpayer, nor does it have shareholders to distribute profits to, and nor does it have to hand profits over to Central Government to be wasted on some pet political project? But it is obliged to hand over some profit to the Motability Foundation, the Charity , which does invest some of these receipts into other charities dedicated to the disabled? The mobility portion of DLA or PiP, by agreement , is paid direct to MO to meet monthly payment costs of Contract Hiring a vehicle, therefore there is certainty of payment, eliminating the possibility of payment delinquencies, and therefore the need for credit assessment. DLA & PiP is a taxpayer funded allowance paid to qualifying individuals and is theirs to spend how they chose, whether that be in Tesco, or anywhere else in the High Street, or on a motor vehicle, maybe via Motability, or another Contract Hire or Lease provider! Would any of us truly expect Tesco to reduce prices because we chose to spend our DLA in their stores? Most of the profit is pumped back into the business, which gives the business strength and staff the ability to negotiate new car deals from that strong position, and some has been returned to us anyway – £ 750 new car payment etc. etc. Staff-As a former Manager of a team of nearly 200 staff, I would much ratgher have a top quality , highly paid and motivated team working on my behalf, rather than the opposite! I wonder how much higher AP’s would be, or how much further restrictions on available vehicles would go, if negotiations were carried out by lesser motivated negotiators, with much lower salaries?,
Absolutely no misconceptions here whatsoever Mike!
I agree with almost everything that you are saying about how MO works and is financed, but I believe that there are fundamental reasons why we should not assess them in the same way as we would any other business. Whilst Motability Operations is a commercial business, it exists purely to provide a service to Motabilty the charity and, in turn, to disabled customers. They are inextricably linked. You cannot look at them in isolation as one funds the other and they Co-exist for a common purpose. They also have no competition, being in the unique position of being a monopoly and, whichever way we dress it up, they are funded by the surrendered benefits of disabled people.
With all of that taken into consideration, I just feel that it is fundamentally wrong to assess them against normal business metrics. You’ve kindly shared your business experience and whilst I don’t want this to turn into ‘business experience Top Trumps’, I was a director of a very large business and, whilst I had a high salary, even at that level I did not have some of the benefits that even the most junior employees at Motabilty Operations staff enjoy. The 5,500 staff that I was ultimately responsible for certainly did not have anything remotely like the benefits package that MO staff enjoy and yet we did not have any difficulty in employing and retaining motivated employees. More importantly, we existed in a competitive commercial world!
I maintain that as MO are ultimately funded by the surrendered benefits of disabled people (many of whom are on very low incomes), operate in a monopoly situation and do not have to fight for business like a normal commercial organisation does, there is no way that they should be positioning their pay and benefits in the upper quartile. I just feel that’s immoral. If the Motability market was opened up to other providers you can bet your life that a new entrant into the market would not offer remuneration packages that are anywhere near the same level and their APs could be a lot lower as a result.