Remploy

Tuesday 16th October 2012 Westminster Hall

16:29

[Mr William Bain (Glasgow North East) (Lab)]

It is a pleasure to serve under your chairpersonship, Mrs Osborne, for what I believe is the first time—I hope that it is not the last time—and it is a pleasure to have secured this debate on behalf of the more than 1,421 people at Remploy factories across the country whose jobs have gone, or will be at risk by the end of the year, in particular the staff who have worked so hard in the Springburn factory in my Glasgow constituency.

Stage 1 of the Department for Work and Pensions process is set to lead to the closure of up to 30 factories by the end of the year, with decisions still due on Barrow, Bridgend, Bristol, Chesterfield, Poole, Croespenmaen and Springburn, as well as on the Cook with Care business. A further 18 factories are under threat of closure by 2015. With as many as 6 million people across the country trapped in joblessness or under-employment because they are unable to find full-time work, and with the Office for Budget Responsibility reporting this morning that the Chancellor’s austerity measures may have stripped even more demand out of the economy than even it expected in June 2010, sustaining good-quality, full-time jobs in manufacturing, particularly for disabled workers, must be a priority for any Government.

In my constituency, 19 people are chasing every vacancy advertised in local Jobcentres Plus, but the situation is even worse for people with a disability. According to the labour force survey, the employment rate gap between disabled and non-disabled people has narrowed slightly over the past decade, by about 5.8%, but it still stands at a staggering 29.9%, in 2012. Only 46.3% of disabled people are in employment, compared with 76.2% of non-disabled people, and disabled individuals are twice as likely as the rest of the work force to need full-time rather than part-time jobs. Without alternative jobs for disabled people to go to, the effect of closing Remploy factories will be to consign those people to a greater likelihood of a future of long-term unemployment, and a greater chance of ending up in poverty, when what they want and deserve is the opportunity to work.

When the Government began the process of factory sales and closures, they relied on the figure that each job supported by Remploy involved a taxpayer subsidy of £25,000 a year, and the Sayce report came up with a figure of a £22,700 annual subsidy per job. The methodology, however, which is based on dividing the total Government subsidy for each scheme by the number of employees, has been queried as a crude measure of the cost per employment place, by the fact-checking organisation Full Fact, among others. It does not account for the different infrastructure costs and asset values that each model is likely to accrue and, similarly, the Government cannot provide data on whether those whose jobs are at risk at Remploy would necessarily find work under the Access to Work programme.

Members are already encountering testimony from constituents who have been laid off by Remploy that shows that the measures promised by the Minister’s predecessor to support them back into work have simply not yet appeared on the ground. Sacked workers with severe learning difficulties are turning up at Jobcentres Plus without a clue about what to do or what the future will hold. Surely disabled workers who have offered years, and in some cases decades, of service, deserve better than that. Should not a Government with a proper moral compass be moving more quickly to end the appalling scandal of sacked workers being given emergency tax codes and suffering the indignity of paying more than half of their final pay packets out in tax, at a time when the Government are cutting taxes for the super-rich?

Like many Members with Remploy factories in their areas, or with constituents employed in a nearby factory, I have been working with the management, the work force and excellent local GMB and Unite trade union officials to reach a settlement that will ensure a durable future for the factory. In the tendering process, the priority has to be to guarantee the viability of the job of every disabled person working for Remploy. I remain hopeful that the strength of the record of the skilled work force in Springburn, in productivity and innovation, will ensure that, once the due diligence stage is completed by Remploy Ltd, the factory will have the opportunity for long-term growth under new ownership.

The local factory in my constituency specialises in the assembly and manufacture of high-quality wheelchairs for use by NHS patients. Once the issue of ownership is settled, there is much that this Government and the Scottish Government can do to help grow the business for the future by better use of procurement processes, within the rules set by the European Union, to ensure that through the application of article 19 of the EU public procurement directive, supported employment workplaces can properly compete for public sector contracts. The Scottish Government could be more creative and proactive in their use of procurement processes within the NHS in Scotland and other public agencies to generate more contracts and more work for the Remploy factory in Springburn.

The UK Government could undertake a similar process to boost demand in supported employment workplaces elsewhere in the UK.

[Toby Perkins (Chesterfield) (Lab)]

My hon. Friend has been working incredibly hard on behalf of his constituents in Springburn, and we have been speaking a tremendous amount about this matter because both our factories—his in Springburn and mine in Chesterfield —are under the Remploy Healthcare banner. We agree entirely about the role of Government, but does he also agree that there needs to be a real collective working together by the management, the Government and the trade unions to ensure that the work force, who are under tremendous stress at the moment, feel empowered and involved in this process and have an understanding about what the long-term future might hold? Recent events have been incredibly stressful for those people, and have led to difficult working circumstances for them.

[Mr Bain]

I entirely agree with my hon. Friend. There has been an impression of a lack of transparency about the way in which this tendering process has operated, which means that lessons could be learned for stage 2 for the other factories that are under threat.

I am aware that the Minister cannot provide guarantees that there will not be any compulsory redundancies, but I hope that she will be able to assure us that the Government will strive to ensure that as many as possible of the disabled workers at Remploy Springburn and the other factories involved in the current tendering process keep their jobs under any new ownership.

Will the Minister also provide a guarantee that TUPE regulations will apply to any sale of the Springburn Remploy factory and any of the others involved in the current tendering round and in any future round of tendering for those factories potentially involved in stage 2?

The right to a fair and stable pension matters greatly, especially to disabled people with higher living costs. Will the Minister guarantee that the current accrued pension entitlements up to the point of transfer will be honoured by any new owners of Springburn Remploy and the other factories in the current tendering round? Will she further outline what minimum criteria for future pension entitlements of current staff and of any new staff in the future the Government will insist on from future Remploy factory owners, mutualisations, leases, or employee buy-outs if the fair deal for staff pensions policy is not to apply to this tendering process?

There are some serious questions to answer about the conduct of this tendering process. Given the shambles that we have seen elsewhere in government over railway franchising, is the Minister content that this process has been conducted in a procedurally and legally watertight manner? Is she sure that there are no grounds for disappointed bidders to challenge the way in which this has been conducted? Will there be a full external audit of the process that both the public and the Members of this House can have confidence in? Is she satisfied that the 90-day consultation is anywhere near adequate? The Sayce report makes it clear that a consultation period of no less than six months is required to help bidders or employee-led buy-outs put together proper business plans to save factories. Why, for example, did the Minister’s predecessor not provide me with any information on the Springburn factory’s profitability, despite repeated requests in writing, whereas she was happy to comment on the financial position of other factories in her original statement? What lesson have the Government learned about providing additional support for management-led or employee-led mutualised ownership of Remploy factories beyond that which her predecessor was prepared to offer earlier this year? Will greater consideration be given to leasing factories to local authorities, other public agencies or even the devolved Administrations, if that might help save jobs or reopen factories, as is hoped in Wrexham?

Households with a disabled person are more likely to live in poverty than those without a disabled person. The hundreds of disabled people who work for Remploy deserve more certainty about their future than the Government have been able to provide to date. The critical thing is not only the ownership of the factories and finding jobs for those Remploy workers who have already, tragically, been laid off after the Government’s wilful refusal to listen and protect proper rights at work for Remploy staff. It is also the procurement procedures that public bodies apply to ensure that supported employment workplaces get a fairer deal for the future. That is the challenge for the Government and their devolved counterparts elsewhere in the UK.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this matter before the House. In Northern Ireland we have an organisation called Accept Care, which is similar to Remploy. Accept Care is partially funded by the Northern Ireland Assembly and creates jobs for disabled people, gives them the training they need and, afterwards, employs them. Does he feel that perhaps the Government need to spend a wee bit now to help those people find jobs and make those businesses profitable?

[Mr Bain]

Absolutely. My hon. Friend has illustrated that the Government have not done enough to learn lessons from other jurisdictions that have had more progressive policies on care for the disabled and support for disabled workers than, sadly, this Administration have followed in recent months.

If we are truly to build a society that values the disabled, it is critical that we do more to protect the right to the dignity of a good job for those able to work and provide proper lifelong skills and training and a decent standard of living for all. That is no less than my constituents who work in Remploy Springburn and those who work in the other Remploy factories across the country deserve, and it is the Government’s duty to deliver.

16:43

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

I congratulate the hon. Member for Glasgow North-East (Mr Bain) on bringing this important debate before the House. It is also a pleasure to serve under your chairmanship, Mrs Osborne.

I have met the hon. Gentleman and other hon. Members who are present on various occasions—if we did not meet in person, we have spoken on the phone—about their Remploy sites. Everything he says is correct, but I want to consider everything in its entirety, because we all want the best support for Remploy staff, not only now but in the future.

We have to be open and honest about why we have this case for change, which is about sustainable work and sustainable jobs. We have to consider all disabled people of working age, which at the moment is 6.9 million people, 2,200 of whom work in Remploy factories. A fifth of the £320 million supports those in Remploy factories. Those are the finances.

However, we are also considering sustainable employment, what disabled people and disabled organisations want and what Liz Sayce’s report says. Many people want to work in mainstream employment. They want to look at different ways of engaging and moving forward. We have taken all that into account, and also looked at the losses that were being accrued year on year—£70 million. I appreciate that four years ago a £555 million package was put in over five years for a modernisation plan. However, targets were not met. They were not realistic and they did not allow the factories to continue, because they required an increase in public sales of 130%, and that just did not work.

I know that 28 factories were closed in 2008. We hoped that that could be the end and that the others would move forward, but that has not happened. As an additional way of mitigating the risk of redundancies to employees, Remploy was looking at how to put a commercial process in place. That process had to work with the Remploy staff; it had to work as a proper business model, work with Government and work with everybody whom it would touch. That is what we were trying to do, so the commercial process for stage 1 was open and transparent. It was published on the Remploy website on 20 March. That process was developed using expert advice on its design and structure and it took into account the need to ensure that employees and employee-led groups had an opportunity to take part actively and develop robust bids. The process has taken in excess of five months, and it continues.

[Mr Frank Doran (Aberdeen North) (Lab)]

I am grateful to the Minister for twice giving me the opportunity to meet her and discuss the process in detail. The latest meeting was yesterday. One concern that I did not raise with her is the persistent belief, at least among the staff of Remploy, that the best factories will be cherry-picked by the management. When I raised the issue with her predecessor in the House, I was assured that there would be independent oversight of the whole process. First, who is conducting the independent oversight of the process, and, secondly, will a report of their findings be made public?

[Esther McVey]

Recognising the need to ensure proposals were robustly addressed, an independent panel was set up to provide independent assurance to the assessment process, and the panel is playing an active part in what went on. I can write to the hon. Gentleman with further clarification on that, but that was one of the key facts.

There was also encouragement of employees and employee-led groups to take advantage of a £10,000 support fund for expert advice, and also a time-limited tapered wage subsidy of £6,400 to successful bids to keep on disabled members of staff. That came about because of Remploy and the Department’s responses and the various people who came forward to look at that.

On the factories that the hon. Member for Chesterfield (Toby Perkins) mentioned—Chesterfield and Springburn —discussions are going forward. Information was put on the Remploy website in September. Nothing has been finalised yet. It is going through due diligence at the moment, but it is in best and final offer stage and getting all the support it needs. We are still waiting on facts.

[Toby Perkins]

To return to the process, my hon. Friend the Member for Glasgow North East (Mr Bain) asked whether the Minister was satisfied that there was no threat of legal recourse from disappointed bidders and that the process was robust. I want to clarify whether the Minister is satisfied that the process was robust and that she is happy to take responsibility for it going forward, and that, as far as she is concerned, we are not going to come back to a west coast main line situation in which everyone says, “It was not my fault”. As long as she is happy and the process is robust, she can take responsibility for it.

[Esther McVey]

I have held numerous meetings on the matter. I have asked the very same questions that the hon. Gentleman has asked. I have felt reassured by the answers I have been given. Remploy announced and published the commercial process on 20 March and the company has been following that process. We are aware that some people and some bidders may be disappointed, but we are content that the commercial process has been followed. So I hope that gives the hon. Gentleman suitable comfort about what is going on.

A substantial package of help and support for employees has been put in place. An extra £8 million has gone into that package. People will get their own personal caseworker, who will give them tailor-made support and help them to move forward.

The hon. Member for Glasgow North East asked several questions. One was about the emergency tax code. That was brought to my attention last month and immediately my team and I worked with Her Majesty’s Revenue and Customs to get it sorted so that the Remploy staff and their caseworkers knew what would happen and they would have their money back as soon as possible, so special measures were put in place absolutely immediately. I also checked that the staff would have money and would not be short. They would all have had their redundancy pay packages, so they would have money to live on—it would be fine—but this was put through as a special concession.

[Graeme Morrice (Livingston) (Lab)]

I am grateful to the Minister for giving way. I congratulate my hon. Friend the Member for Glasgow North East (Mr Bain) on securing this very important debate on a subject about which I have received many representations from constituents and others. On the issue of support for the work force and for those who are losing their jobs, will the Minister confirm how many people from Remploy who have lost their jobs have found alternative employment to date?

[Esther McVey]

So far to date, 35 staff immediately found work. But we are content that with the support, the packages and the monitoring that we are hoping to provide for everyone, we will get that number up as soon as possible.

I actually got figures that I again hope will put the hon. Gentleman’s mind at ease. In Scotland, there were 111 people—that does not seem quite right. I apologise; I will look again. I will go back to the hon. Member for Glasgow North East and say that in his constituency a total of 14,600 people are disabled, and 43 of them work at the Remploy site. However, in the last year, under the Remploy employment services, 534 people had got into work. So, if we look at those figures, we can see that incredible support has gone in there to help find work for people similar to the staff working in Remploy.

I will continue with the Springburn site. Remploy communicated via its website in September that it had selected a preferred bidder for the site and that that preferred bidder is now entering a period of due diligence, which will hopefully end in Remploy’s successful exit from the business. A final decision on Springburn will be made as soon as the commercial due diligence process is complete, which we understand will be some time at the end of October.

Going forward, for Springburn and Chesterfield to secure future health care business as part of the commercial process, the Scottish Government would have the opportunity, under their devolved powers, to support medical contracts and help to secure the continuing viability of those sites. Again, that is possibly something that hon. Members can work on together.

[Graeme Morrice]

The Minister mentioned the Scottish Government. Have the UK Government had any consultation with the Scottish Government on this issue?

[Esther McVey]

We have indeed, and I will be in Edinburgh on Monday. We will have continued dialogue on that subject. I also hope to meet the factory workers in Edinburgh and while I am there I would like to see as many staff as possible—those who do not have their job now and those who do. There is an open invitation for people to come and meet me, and I will be in the factory.

The hon. Member for Glasgow North East also raised the issue of TUPE. Any purchaser of a Remploy site will have to offer a pension scheme in which transferring employees can accrue future rights. If TUPE regulations apply to a transfer, purchasers will have to match employees’ contributions up to 6% of pensionable pay, in line with pension legislation. We understand that for the Springburn site TUPE regulations will apply to the transfer.

I hope that I have answered as many questions as possible.

[Mr Doran]

The hon. Lady answered my question about whether there was independent oversight, but not my question about whether a report on that oversight would be published.

[Esther McVey]

I will find out and let the hon. Gentleman know. If there is, he will be the first to know.

[Graeme Morrice]

Inspiration.

[Esther McVey]

Absolutely. It is not just inspiration, but the support of a good team. The independent panel has considered the comments of Scottish and Welsh representatives. I think a report will be coming out on that. The hon. Member for Aberdeen North (Mr Doran) and I met yesterday, and I hope that he now has a meeting with the CEO of Remploy. Straight away, I asked what we could do in the Aberdeen factory. All the points he raised with me about the assets, the factory and site ownership were dealt with this morning. I do not have the answers, but we are on to that. My phone lines are open. I am always here. If anybody wants to know anything more, I will be available to answer their questions.

[Jim Shannon]

As I said earlier, we have something similar in Northern Ireland. Do the Government intend at least to seek it out and see how it works? The finance comes from the Northern Ireland Assembly and it does the same thing that Remploy does in England and Wales. A new Accept Care is opening in the north-east too, in Darlington, so some things are happening that could benefit us all.

[Esther McVey]

I will take advice from wherever it comes and that could possibly play a part in stage 2. I do not know how it could possibly go backwards and affect stage 1, but I will listen and consider what can be done for stage 2.

Question put and agreed to.

16:57

Sitting adjourned.