Chancellor Rachel Reeves told Channel 4 yesterday that she “can’t leave welfare untouched”, as speculation mounts that additional costs will be added to the Motability scheme.
In the interview Reeves said ‘You know we’ve now committed to doing reform in a different way, but we can’t leave welfare untouched.
‘We can’t get to the end of this Parliamentary session and I’ve basically done nothing.
‘Because if more and more of our money that we spend as a government is spent on welfare, you’ve got less for the NHS, you’ve got less on schools and you have to put more on people’s taxes.’
Reeves gave no details of what she intended.
But the press have been briefed that the chancellor is considering ending exemption from VAT and insurance tax premiums for Motability cars. Whilst this would not reduce the benefits bill in any way, it would increase the amount of tax paid by claimants using the Motability scheme. This could result in around £1 billion a year in extra revenue for the government.
The possibility of removing luxury car brands such as BMW and Mercedes from the scheme is also being considered, as the inclusion of these vehicles causes such outrage in some sections of the press.
More details about what the Chancellor has planned may not emerge until the budget on 26 November.
You can watch the Channel 4 interview here.
