Friday, December 07, 2018

Motability Profits a Few

Mike Betts, chief executive of Motability Operations, the boss of the business that leases cars to people with disabilities on behalf of the Motability charity is to receive a £2.2m bonus on top of his annual £1.7m pay package.
A National Audit Office report was critical of the performance plan put in place for Betts and his fellow directors in 2008, saying that the targets meant to incentivise “excellent performance” were set at levels below what the company was achieving when the scheme was introduced.
The targets were “easily exceeded” and in the first seven years of the plan, five executive directors received “generous” remuneration of £15.3m in total, a near fourfold increase for what the NAO suggests was unexceptional performance.
The scheme is overseen by a charity, Motability, and operated under a seven-year rolling contract by Motability Operations, which is a public limited company. The NAO found that the charity has little formal influence over Motability Operations’ executive pay arrangements.
 Motability does not directly receive public funding, critics point out that it receives about half of its annual £4bn income from disability benefits redirected to it by the Department for Work and Pensions (DWP) on behalf of claimants. It also receives £888m worth of tax breaks that no other firm is entitled to, and is in effect a monopoly.  It has operated in a protected environment, the NAO says. It has made £1bn in unplanned profit since 2008 and holds nearly £2.6bn in reserves, significantly higher than other major car-leasing companies.
 Betts’ package is likely to shrink from £1.7m to £1.4m in 2019-20 – the NAO says it will still be substantially more generous than those for comparable public sector organisations that compete with the private sector for executive talent, such as BBC Studios and Network Rail.
The NAO notes that the company has donated £345m to the Motability charity since 2010. In September it announced a further £400m donation, an amount equivalent to 14 times the charity’s annual spending in 2017-18. It was not yet clear that Motability could absorb the scale of the donations it has received or spend them effectively.

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