Motability to be investigated by National Audit Office

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  • #51530
    Wigwam
    Participant
      #51531
      Wigwam
      Participant
        #51533
        Wigwam
        Participant

          On its Chief Executive’s pay:

          48.Motability Operations bases its pay on a comparison with FTSE 250 companies. Motability Operations does not, however, face a number of fundamental risks and stresses that FTSE 250 companies face:

          Motability Operations exists as a state-supported monopoly. The Government provides it with VAT and IPT tax breaks worth £700 million per year, to which no other vehicle hire company is entitled. This makes its vehicles significantly cheaper than those of any other competitor. It will never struggle to attract clients.
          It does not need to compete for its single customer contract as service provider to Motability, because Motability “does not think competition is in its best interests”. Therefore, Motability Operations is guaranteed to retain its only major strategic service contract.
          It faces no shareholder pressure because its shareholders are not seeking either an income return in the form of dividends or a capital gain in the form of share price growth.
          It faces no credit risk from its customers because its customers payments are paid straight from Government.

          #51537
          Trev
          Participant

            Interesting read Wigwam, just dissecting it bit by bit myself, but have looked at the NAO section on the report and compared to the Guardian article. Think it needs clarifying that NAO are at this stage only considering what work, if any they would like to do. It isn’t 100% at this stage that an audit will take place, unless the Guardian knows more than the content of that report.

            Here’s a copy of correspondence i had from NAO back in March when i enquired if Motability will be audited. It states in that i will be informed if they decide to undertake work and when that is likely to start, but i’ve had no further correspondence since. Just to ensure they haven’t forgotten me, I have replied this morning attaching a link to the Guardian article asking if progression has been made. Will keep your thread updated when they reply.

            Cheers Wigwam

             

            #51543
            Wigwam
            Participant

              Trev, as I read it – the Committees are to ask DWP to ask NAO to carry out an investigation on the basis of their findings. It’s unlikely to refuse and Motability have agreed to be investigated.  I think the only concern will be when. I’m not holding my breath…

              #51544
              Joe London

                I can’t see what an audit will prove. Its not a public body, it seems to be a very well run company, no debt and always rated as a great place to work, and is generally highly rated by it’s client’s . However it’s in a unique situation with no competition and one customer, the charity. It also seems to have been caught out in the pcp /lease boom, and the PIP farce of reassessments.  The CEO wage is out of all proportion and was always going to be open to a public outcry. A far simpler and transparent system would be better, what might happen now, the knives are out is either cut the number of cars and have a few highly competive brands offering the best that they can, or its opened up to lease companies like drive the deal, or manufacturers allowing competition. I also think Cars at the end of 3 years should be offered to the clients at below market value, and longer 5 year leases on a sliding scale of payment to avoid stumping up higher and higher AP and risk losing a car due to Pip going the wrong way.

                #51545
                Wigwam
                Participant

                  Joe, you are right that Motability Operations is well-run but it is merely an arm of the Charity which was set up to benefit the disabled.  That MO is amassing increasing reserves year on year is because it is making a profit which it is not there to do.  While we are in a good financial position compared with commercial leases, we, and the causes the Charity supports would be even better placed if MO was leaner and stopped using our money to enrich itself.

                  #51550
                  Trev
                  Participant

                    Yeah, i can see it happening, I emailed the NAO asking when it was likely to start and how long is it likely to take, as my renewal is due next year and am apprehensive what changes could be made from the result of the audit.

                    #51553
                    Wigwam
                    Participant

                      I’d like to think the cars on the scheme will get cheaper. The build-up of reserves (which are essentially profit) can’t continue.  As one Committee comment said, they could reduce the reserves by operating at a loss!

                      #51558
                      Littledave

                        Political grandstanding. You can guarantee that whatever comes out of any audit will be bad news for the users of the scheme.

                        #51560
                        Joe London

                          That is true .

                          #51574
                          Oscarmax
                          Participant

                            The Mobility Car is a very well run company, the government could well learn from Mobility business model, the little green eyed monsters if they had their own way would stuff it up.

                            Ask you self how many of the government project or initiatives end on failure, or much easy how many have been a success.

                             

                             

                             

                            #51578
                            callmejohn

                              I think the threat of an audit or investigation, may well move Motability Operations into trying to show that they have been motivated into trying to reduce the criticism by

                              Reducing the AP’s,

                              Widening the choice of cars which has no cost to Motability Operations.

                              Leveling out the AP’s for automatics compared to manuals, when automatics is not a luxury for many disabled people but a necessity.

                              Selling their cars at the end of  the lease to its members at the same price it sells the cars at auction or to the trade

                              Increasing the good condition payments (which in turn gets them a higher price when they sell on the cars), even if they are selling the cars to the person who has kept the car in good condition.

                              Letting the next of kin keep the car free of charge for a month when their customer dies.

                              Hopefully all this will happen before I order my new car in July (Q3).

                              I don’t  think any of these suggestions would sufficiently harm Motability Operations in running a successful company.

                              I still don’t see how we would have to pay extortionate rates of pay to the people at the top for running a business which was handed to them on a plate.

                              #51581
                              Glos Guy

                                Having read all 35 pages of the report, the one line that jumped out at me was that Motability Operations ‘made an average of £1,014 per vehicle supplied to Motability customers’. In other words £1,014 profit, after all costs. That means that AP’s could be reduced by an average of £1,000.

                                Also, having KPI’s based upon customer feedback is laughable, given that most Motability customers adopt the ‘I’m only too grateful for what I am given’ attitude and are oblivious to the fact that the scheme doesn’t always offer as good value as many believe.

                                #51582
                                Joe London

                                  Well said. Glos guy.

                                  #51586
                                  callmejohn

                                    Well spotted Glos guy

                                    What a difference a £1’000 reduction would make to customers being able to choose a suitable car with such things as leather seats to make it easier to get in and out the car, a reversing camera, a large boot for a wheelchair or scooter, ect. Or for anyone who is struggling to raise any kind of AP.

                                    Come on, play fair Motability and don’t just abuse the power you have over us. There is a lot of good things and improved things over the the years about Motability, but there is also an onus on them to be the best that they can be for their customers, not just what’s best for their staff and shareholders.

                                    #51593
                                    Andy
                                    Participant

                                      Be careful what you wish for. The results of the enquiry will more than likely mean disabled people getting screwed over even more.

                                      #51594
                                      JS
                                      Participant

                                        They can use my £1000 worth to help fund updating their car search page.

                                        #51599
                                        finsoop

                                          Often outcomes from these reviews throw up unexpected and undesired conclusions and recommendations to the detriment of all parties.

                                          #51602
                                          Montysa

                                            Mobiliy is a charity and not there to make a profit to pay bosses astronomical wages.

                                            There is hardly any risk as Goverment guarantee payments.

                                            No taxes are paid other leasing companies have to pay tax and make profit to pay share holders.

                                            Many bosses would love to run a company with so little risk for a lot less wages.

                                            Come Mobility bosses lets not be be so greedy and bring down advance payment.

                                             

                                             

                                             

                                            #51607
                                            callmejohn

                                              Not only are Motability Operations guaranteed payment by the DWP (unless they die or are thrown off the benefit), they are also guaranteed the full amount of the AP before the car can be driven away.

                                              The fact that customers have to have large lump sums in advance, must surely refrain a lot of its customers from being able to pick the most suitable car available, which they would be able to do if they could spread that AP monthly over the 36 months or even take their car on a 5 year lease from the start of the contract.

                                              #51608
                                              callmejohn

                                                Why don’t we get some of our senior forum officers to write to the National Audit Office and ask them to read our forum and our concerns, even if we could all electronically sign it. I fear that if they were to look into the Motability members own forum, then they may well get a different opinion of how satisfied the Motability Operations customers really are.

                                                #51628
                                                AlanA

                                                  This is interesting from Disability motoring, I think there are some big changes coming

                                                  https://www.disabledmotoring.org/news-and-features/news/post/395-motability-select-committee-report

                                                   

                                                  #51630
                                                  Trev
                                                  Participant

                                                    Cheers Alan,

                                                    Hope i’m wrong, but tax breaks seems to be mentioned more than once, and the implication to me is they could be reduced as a means to make motability less profitable, rather than adding benefit to the scheme for the scheme members e.g by reducing AP’s

                                                    #51631
                                                    Wigwam

                                                      There is no doubt that Motability Operations is flush with money – our money.  There is a clear opportunity for the Exchequer to grab that money by reducing the tax concessions granted to motability.

                                                      Question is, how do we, the users of the scheme represent ourselves at that point? Through the Charity, or otherwise?

                                                       

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