Ministers anticipate saving £1 billion by 2030 through significant reforms to the Motability scheme, which assists disabled individuals in acquiring vehicles.
The programme faced considerable scrutiny last year after reports emerged that luxury brands, including BMWs and Mercedes, were accessible through its provisions.
Rachel Reeves initiated changes at the Budget by removing these high-end vehicles. Now, further measures announced in the autumn are being implemented.
Motability customers who make one-off advance payments for larger and more expensive cars will have to pay VAT, and all new leases will now be covered by the insurance premium tax.
Some users of the scheme point out that their disabilities mean they have no choice but to use larger vehicles to enable them to maintain their independence, and so believe they will be penalised by the changes.
Work and Pensions Secretary Pat McFadden said: “Today’s changes are driven by the fairness that underpins this Government – fairness for the taxpayer, fairness for disabled people and fairness for the country.
“We’re saving £1 billion of taxpayer money by removing VAT relief from some new Motability leases whilst ensuring the scheme still supports disabled people’s mobility and independence.
“We’re building a fair welfare system and an economy that works for everyone.”
Ministers are attempting to reform the welfare system in order to save money and get more people currently claiming sickness benefits back into work.
Andrew Miller, chief executive at Motability Operations, the company that runs the Motability scheme, said: “Tax changes announced in the UK Government’s Autumn Budget have significantly increased the cost of running the Motability scheme.
“While we have had to make difficult decisions in response, the changes we are making mean the scheme can keep disabled people connected to freedom and independence now and in the future.
“The scheme continues to offer value for disabled people, including cars with no advance payment in addition to their weekly payments.”
A group of leading charities had urged the government to rethink cuts to the Motability scheme as experts warned of the negative impact they will have on disabled people.
Convened by Transport for All and backed by Labour MP Neil Duncan-Jordan, 70 organisations wrote to disability minister Sir Stephen Timms asking him to engage with disabled people on the changes to fully understand the impact they will have.
Signatories including Disability Rights UK, Amnesty International UK, and the Trussell Trust wrote in March: “Motability is a vital scheme, and these cuts will create further barriers for disabled people, including those with long-term and progressive conditions to access employment, education, medical appointments and to live independently.
“We urge the government to engage urgently with disabled people and with deaf and disabled people’s organisations along with other organisations working with disabled people to understand the real-world impact of these policy changes.”
This article has been amended. It previously stated that some people ’opted’ for larger vehicles without stating that some individuals require them as a result of their disabilities.
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