§ Mr. Rathboneasked the Secretary of State for Social Services if he will make a statement on the future of Motability following the increase of VAT in the Budget.
§ Mr. Ennalsasked the Secretary of State for Social Services, in view of the fact that the increase in VAT has caused Motability to suspend its scheme for leasing vehicles to disabled people, if he will take action to deal with this situation.
§ Mr. Patrick JenkinMotability operates a scheme under which a disabled person who receives mobility allowance may lease a car, maintenance and repairs included, in return for the allowance. The lessee has to pay for petrol and insurance and to pay an advance rental which varies according to the car chosen and the type of adaptations needed, if any. The Government fully support these objectives.
A combination of factors—rising car prices, the recent increase in VAT, and rising interest rates—meant that the advance rentals would have had to be increased substantially. Motability considered that many disabled people would not be able to afford these and so decided to suspend the issue of new leases; and they requested the Government to relieve the organisation of value added tax.
159WI am glad to say that my right hon. and learned Friend the Chancellor of the Exchequer has agreed to lay an order as soon as possible which will relieve the organisation of the effects of the Value Added Tax (Cars) Order 1977. This will mean that, whilst the regular leasing charges paid by Motability's clients will still bear the tax, the organisation will in future be able to recover the input tax paid on the purchase of cars.
This concession, along with the 20 per cent. increase in mobility allowance which will take place in November, will, I understand, enable Motability to resume issuing car leases on better terms than those obtaining in the period before the Budget.