Lord Sterling's statement on transitional support package
Read Lord Sterling's statement below to find out about the one-off transitional support package for customers who, following their initial reassessment by Government for the new PIP benefit, will no longer be eligible for the Motability Scheme.
In April 2013, the Government introduced a new benefit - Personal Independence Payment (PIP) - which will gradually replace Disability Living Allowance (DLA) for disabled people aged between 16 and 64. Motability acknowledges that there are positive aspects of PIP compared to DLA in the longer term. However, over the last two years, the Governors of Motability have considered how PIP will affect Motability Scheme customers and, in particular, the degree to which we can assist those customers who lose their eligibility to remain on the Scheme when they are first reassessed for the new benefit.
Between October 2013 and 2018, the will reassess some two million disabled people aged between 16 and 64, who currently receive DLA, for the new PIP benefit. This reassessment process will include approximately 360,000 of the 620,000 disabled people who currently lease a vehicle through the Motability Scheme. Because PIP is a new benefit with different criteria to DLA, some disabled people may not qualify for mobility support under PIP or may do so at a lower level than they had under DLA. As a consequence, they will no longer be eligible to use the Motability Scheme.
Since its inception over 35 years ago, the standard of service and support provided by the Scheme has always reflected the very special needs of our customers. Some two years ago when the Government initially proposed the adoption of PIP, we decided that we wanted to help those customers who can no longer use the Scheme to retain their mobility outside of it. Therefore, over the next five years as PIP is introduced, the Motability Scheme plans to provide a one-off transitional package of support and advice regarding alternative mobility arrangements to these former customers.
Background on Disability Living Allowance (DLA) and Motability
Disability Living Allowance (DLA) is a Government benefit to help with the extra costs arising from disability. DLA is not means-tested or taxable, and is paid whether the disabled person is working or not. The Department for Work and Pensions (DWP) determines who is eligible for DLA, based on an application completed by a disabled person, supporting evidence provided by the applicant and, in some cases, a medical assessment carried out on behalf of DWP.
Motability was formed as an independent charity with all-party Parliamentary support in 1977. Since then, the Motability Scheme has supplied over 3.5 million vehicles to disabled people and currently has over 620,000 customers. Although we have always worked closely with DWP on issues related to the Scheme, Motability has never of course had any role in determining who should receive DLA; that is solely the responsibility of the DWP.
Once in receipt of the Higher Rate Mobility Component of DLA, a disabled person is eligible to join the Motability Scheme. It is entirely up to the recipient whether they wish to spend their allowance joining the Motability Scheme or in some other way. Approximately one third of eligible recipients choose to use their allowance to lease a vehicle through the Motability Scheme. Customers today benefit from a wide choice of manufacturers and vehicles available through the Scheme, including specialised adaptations and wheelchair accessible conversions. Through its relationships with manufacturers, dealers and other service providers, the Scheme also supports customers with a high level of personal care, expertise and service appropriate to their needs.
Once an eligible disabled person decides to join the Motability Scheme, they ask the DWP to pay the Higher Rate Mobility Component of their DLA directly to Motability Operations (who operate the Scheme under contract to Motability) irrevocably for the duration of their lease agreement. The Scheme buys over 200,000 cars each year, accounting for some 10% of the UK new car market and enabling Scheme customers to benefit both from the discounts which it can negotiate with motor manufacturers and also from the very close and helpful relationships we have with manufacturers and dealers. At the end of the lease, which is usually three years, the customer returns the car for resale by Motability Operations.
However, we cannot extend the Scheme to disabled people not in receipt of the Higher Rate Mobility Component of DLA. For more than 35 years, the availability of the mobility allowance from Government (most recently, the Higher Rate Mobility Component of DLA) has provided a sound financial basis for the Scheme and this linkage remains fundamental to the Scheme’s viability.
Introduction of Personal Independence Payment (PIP)
The Motability Scheme will work with PIP in exactly the same way as it does with DLA; disabled people who receive the Enhanced Rate of the Mobility Component of PIP will be eligible to use the Motability Scheme, if they choose to do so, in the same way as people who receive the Higher Rate Mobility Component of DLA.
Today, the Motability Scheme supports over 620,000 disabled people and their families across the United Kingdom, for whom an affordable and suitable vehicle provides levels of freedom and independence that would otherwise be beyond their reach. However, PIP is a new benefit with different eligibility criteria to DLA. As the DWP reassesses current DLA recipients aged between 16 and 64 for PIP, those who are Motability Scheme customers may qualify for the Enhanced Rate of the Mobility Component of PIP, in which case they should enjoy a seamless service as they move from DLA to PIP. Some customers, however, may not qualify for mobility support under PIP or may do so at a lower level than they had under DLA and, as a consequence, they cannot continue to lease a vehicle from the Scheme. Although they had properly claimed and received DLA, these changes are the result of a new benefit being introduced by the Government with different eligibility criteria.
As a consequence, some disabled people may have enjoyed the benefits of the Motability Scheme for many years but find that they can no longer use it as they are no longer in receipt of the relevant mobility component of DLA or PIP. While we cannot replicate the benefits of the Motability Scheme for them on an on-going basis, because we have a long history of offering a unique service to disabled people, we aim to provide a one-off package of support and advice to help such customers through this difficult transition.
One-off transitional support for customers who lose eligibility to remain on the Motability Scheme
Since 2010, Motability has maintained a close dialogue with DWP as they developed their plans for the introduction of PIP through a number of public consultations. Over the last two years, Motability has also consulted disability organisations including Disability Rights UK, Disabled Motoring UK and groups representing customers with specific impairments, as well as undertaking considerable research with our own customers, to discuss what help would be most useful for those customers who are no longer eligible to use the Scheme. We are very grateful to all of the organisations and individuals who have helped us in developing and prioritising proposals for how we support these customers.
In order to ensure that the Motability Scheme is sustainable for the long term to continue to help the disabled community for at least another 35 years, we have the responsibility to identify risks, long term as well as short term, especially in these uncertain times. Taking account of these considerations as well as of our customers’ needs, Motability and Motability Operations have concluded that the following support can be provided to customers leaving the Car Scheme as a result of a PIP reassessment:
- DWP has already announced that they will allow DLA payments to continue for four weeks after they make their decision regarding PIP. In addition to this, the Scheme will allow customers to retain their vehicle for up to a further 3 weeks from the date the DLA payments end. The customer will therefore be able to retain their vehicle for close to two months after the DWP decision is made.
- Customers will need to return the car to the dealership in good condition and within the agreed timeframe in order to qualify for the following transitional support:
- For customers who entered into their first lease agreement with the Scheme before January 2013 and therefore could not have been aware of PIP and the associated risks when they joined (the vast majority of customers), we will provide transitional support of £2,000. For many customers, this will enable them to continue to have mobility by purchasing a used car.
- For customers who entered into their first lease agreement with the Scheme with an awareness of PIP being introduced and of the risk that they could lose eligibility following a future PIP reassessment i.e. after January 2013 and up to December 2013, we will nonetheless provide transitional support of £1,000.
We will review these levels of transitional support during 2015 to take account of economic conditions and of any possible changes the Government may be making to PIP at that time.
- For customers who have made an Advance Payment (an additional upfront payment to lease a larger or more complex vehicle on the Scheme), the Scheme will continue to refund any Advance Payment on a pro-rata basis. No further costs will be applied to customers whose leases end early as a result of a PIP reassessment.
- We will work with our Scheme suppliers, including RSA and RAC, to provide general information on motoring, insurance and other motoring services outside of the Scheme. This will include information, for example, on buying a new or used car, and arranging insurance and other services such as breakdown cover. In particular, we are working with a leading UK insurance broker who will offer insurance quotes to former Scheme customers that will recognise their no-claims history on the Scheme. We are also working with manufacturers and dealers to ensure that they are aware of the issues faced by these customers and are able to discuss possible alternatives to maintain their mobility once they have left the Scheme.
- The Scheme will offer customers an opportunity to purchase their vehicle following the end of the lease. The payments that they would otherwise have received upon returning the vehicle can be directed towards the purchase price.
- We will work with customers who have Wheelchair Accessible Vehicles on the Scheme on a case by case basis to understand and assist with their future mobility arrangements including, where appropriate, enabling them to retain their current vehicle.
- For customers with adaptations, we will help them with the costs of fitting the same adaptations to a non-Scheme vehicle.
The Motability Scheme will also provide a package of support and advice to customers currently leasing a scooter or powered wheelchair, with the objective of allowing them to retain their current product wherever possible.
As the DWP plans to begin reassessments of existing DLA recipients in October 2013 and each reassessment will take several months to complete, we do not expect any Scheme customers to become eligible for this support until early 2014. We will monitor customers’ feedback on the support and advice we provide and we may make changes to it based on experience. We will also formally review all aspects of our support package in Autumn 2015, to take account of economic circumstances and any possible changes the Government may be making to PIP at that time.
In the years to come, the Motability Scheme will receive applications from recipients of PIP as well as from recipients of DLA and we will continue to meet the needs of disabled people, as we have done since 1977.
Chairman, Motability Board of Governors