The chief executive of Motability, Mike Betts, will resign by next May after details of a £2.2 million undisclosed bonus and overcharging of customers by £390 million were revealed by the National Audit Office (NAO). Frank Field, chair of the commons work and pensions committee described Bettsincome as ‘obscene’ .
In today’s report the NAO accuses Motability of having a bonus scheme for its executives with targets that it was very easy for them to exceed.
As a result, five directors pocketed £15.3 million over 7 years, just for reaching performance targets that were lower than the ones Motability was already reaching when the scheme was set up.
But it is Betts who has made the most from the bonus scheme.
Between 2010 and 2015 he had a bonus system intended to encourage him to stay with the company for 5 years. It was worth a total of £1.86 million by the end of the five years. This sum was then transferred to a new scheme because Betts stayed on.
The bonus is now worth £1.86 million and would have risen to £2.2 million by 2022, if Betts was not leaving.
The existence of the bonus had been kept from the work and pensions committee when it investigated Motability earlier this year.
According to the NAO, Motability has made £1.05 billion in unplanned profit since 2008, primarily because it habitually underestimates the resale value of used cars and ignores what the rest of the market thinks their value will be.
As a result, disabled customers have been charged £390 million more than they should have been to cover the cost of their leases.
Motability currently has reserves of £2.62 billion, much more than is justified by its business needs. The NAO says that Motability could hand over a chunk of these reserves to its charitable arm.
Frank Field accused Betts of ‘lining his pockets’ at the expense of disabled claimants and called on the government to force Motability to spend more of its cash on improving the lives of disabled people:
“We knew already that executive pay at Motability Operations was out of control. But the NAO has now uncovered the full extent of it, and revealed that the Chief Executive is in line for a £2.2 million bonus payout, on top of the obscene amount of money he has already been given. This is a man whose income is already more than most people can expect to see in a lifetime. It is beyond appalling to learn that money that could have been used to improve the lives of disabled people will be lining his pockets instead.
“Despite a joint select committee inquiry earlier this year, this is the first time these figures have been out in the open. Motability Operations now has serious questions to answer about the information they provided to Parliament.
“With reserves on this scale, and the cutting of executive rewards long overdue, there is now huge scope to improve the lives of hosts of disabled claimants without asking taxpayers for a penny more. Will the government act now?"
Read more from the NAO on Motability here
Read more from the work and pension committee on Motability here.
