There’s a massive risk to Motability with bad debt if the AP can be reduced in favour of a credit facility. However, what if they offered a savings opportunity? In conjunction with a FCA recognised bank they could give a new customer or returning customer an option to add a set monthly amount from their daily living PIP, whether that’s £15 or £100 every 4 weeks. Then the bank can add a favourable interest rate and in 3 years time there’s a pot of money that can either be the AP or reduce it.
However, you are then creating a ‘two tier’ system, as not all those who receive the Enhanced Mobility Component (and use Motability), receive the daily living component. So, those that do could save in the scheme, those who don’t cant. Plus it would require changes at the DWP to manage the diversion of part of the daily living component to the ‘savings plan’ – good luck with that. It may also set off a nasty case of the ‘law of unintended consequences’ at the DWP – i.e. If the person is saving up part of their Daily Living Component, do they really need it for ‘daily living’ needs? That then gives ammunition to the former Conservative government’s Green Paper. Yes, the voucher idea possibly has been dropped, but Labour have not scrapped the Green Paper and if they could save a bob or two on the welfare bill in the current economic climate………..! Perhaps now is not the time to visit that idea!
The simple answer is to open the savings to all and include standing orders or automatic payments instead.
However, both the saving and loan versions stand the same two tier as many who do get cars can just about afford to run them let alone save on top, although there’s still a grant scheme for the really needy.
I was just thinking that a savings scheme opens up to charity or government support in the form of additional interest payable or tax free schemes (a Mobility ISA?) and that may be incredibly helpful for those with WAVs that require substantial AP and conversion costs.
I'm Autistic, if I say something you find offensive, please let me know, I can guarantee it was unintentional.
I'll try to give my honest opinion but am always open to learning.
Mark