Remploy Factories

Tuesday 4th December 2012 Westminster Hall

16:09

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

It is a pleasure to serve under your chairmanship once again, Mr Streeter, and to have secured this debate on behalf of Remploy workers and their families in my constituency and across the country.

Tomorrow is the day of judgment for the Chancellor’s failure to grow the economy, but today is the day of decision for this Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey). The honour of serving in the Government comes with responsibilities, and the hon. Lady and her colleagues must accept that it is not just the Chancellor’s fiscal and growth policies that are not working, but her Department’s strategy on long-term unemployment among the disabled, which has been worsened by the short-sighted and ruinous decisions to close 31 Remploy factories across the country this year. Now, 46 jobs in the Springburn Remploy factory in my constituency hang in the balance, and it is to those dedicated workers that the Minister must give hope, and clear answers, today.

The Minister will no doubt remind me that there have been Remploy factory closures before, under different Governments, but the economic, and particularly the employment, climate are now very different. This is the longest journey out of an economic slump for 140 years, with median wages in Scotland falling by 7.9% in the past two years. We need only look at the closed stores on our high streets to see the effects that the lack of demand is having on the spending power of local communities. If unemployment in general is far higher than it should be, nearly four years from the low point of the recession, how much worse is the picture for disabled people?

There are 63,000 more disabled people out of work than a year ago, and 554,000 of them out of work in total, which is a record high since figures were separately allocated for the disabled.

[Jim McGovern (Dundee West) (Lab)]

I congratulate my hon. Friend on securing this very important debate. I have visited the Remploy factory in my constituency so many times now that I am on first-name terms with almost all the members of the work force. They seem to be a happy work force. They are happy to stay where they are and do not wish to go elsewhere. Does my hon. Friend not agree that it seems a perverse Government policy to throw disabled people on to the dole, against their wishes, and then tell them that if they do not find alternative work they must work for nothing or have their benefits cut?

[Mr Bain]

Absolutely. My hon. Friend highlights precisely the complete lack of logic in the proposals, at this time when the disabled, young people and people in long-term unemployment are encountering the toughest employment conditions in decades.

[Mr Jim Cunningham (Coventry South) (Lab)]

We have Remploy in Coventry, and it is one of the most profitable organisations there are. It has contracts with Jaguar and Ford, and if a factory can get such contracts and drive hard bargains it is doing very well. The tragedy, which anyone who has met these people from Remploy knows, is that within days they were sacked, and some of them will never work again. The Coventry plant operates like a normal factory as, I am sure, do others. It is amazing. They have their own representation. What is being done is short-sighted and, more importantly, it shows the true face of this Government.

[Mr Bain]

Indeed, and the Government should be looking at the application of procurement rules, striving every sinew within the Cabinet Office, the Treasury, the Scotland Office, the Northern Ireland Executive and the Welsh Assembly Government to ensure that good industries such as these have the accessibility to public service contracts that would give them a good long-term future. That is one of the things that I will be asking for later.

The Minister, perhaps inadvertently, revealed the real picture when I last secured a debate on the topic in this Chamber: of the 1,021 disabled workers sacked by Remploy and this Government in their closure programme of this year, a mere 35 have found other work. Will she be able to update us on the most recent figures when she winds up?

[Gloria De Piero (Ashfield) (Lab)]

The issue cannot be divorced from the economic situation that we are in. In the areas where the factories are based, 17 people are chasing every job. Does my hon. Friend agree that this is precisely the wrong time to cut disabled workers adrift?

[Mr Bain]

I entirely agree with my hon. Friend.

Those 35 people are not in jobs of equivalent pay and skills to the ones they had with Remploy; they are the only 35 people who have got any work at all. Additionally, the Work programme is placing only 2.5% of long-term jobless people in my constituency, and less than 4% across the country, into sustained work.

To have any chance of producing a solution to the crisis, the Minister must recognise the true problem: the economy is too weak and long-term unemployment is soaring. Some 1,320 people in my constituency alone are long-term jobless. Vulnerable groups such as the young and the disabled are suffering the most. The OECD has shown that a disabled person is twice as likely to be unemployed as a non-disabled person. It is clear from the figures so far that the Minister’s plans for Remploy workers, and for the disabled as a whole, are not working.

The reality is that the longer someone is out of work, the lower their chances are of finding another job. So instead of doing nothing, the Minister should be redoubling her efforts to help disabled people in long-term unemployment get jobs now. It is unacceptable to plough on with a failed strategy that simply consigns sacked Remploy workers to near certain long-term unemployment, and crushing poverty, as a result.

In the spirit of constructive engagement, I offer the Minister a plan out of the hardship that the closure programme is inflicting on disabled workers across the country. First, given the ways in which I have shown it is increasingly hard for the disabled to find new work, the Minister should announce today a moratorium on any further factory closures in phases 1 and 2 to lift the threat from 18 other Remploy factories in communities such as Clydebank, Cowdenbeath, Dundee, Stirling and Leven, as well as in Springburn.

Secondly, I ask the Minister to convene an urgent working group, to report by the end of the year, composed of officials from her Department, the Scottish Government, Glasgow city council, Scottish Enterprise, trade unions and other representatives of the disability and local business communities to help locally elected politicians draw up plans to save the Springburn factory.

Thirdly, I ask the Minister to engage specifically with the Scottish Government to build on the commitments made by Minister Fergus Ewing in Holyrood last Thursday to introduce a proper strategy to support Remploy staff in Scotland and those who have already lost their jobs but not found new work, as the Welsh Assembly Government and the Northern Ireland Executive have already done.

Fourthly, the Minister should ask ministerial colleagues to review the application of public procurement rules, particularly the application of article 19, and to draw up plans for how supported employment workplaces can more effectively win Government contracts and secure their long-term futures. The Springburn factory makes high-quality wheelchairs for the NHS, but it has no long-term relationship with the NHS in Scotland or with Government agencies at UK level.

Finally, given the disastrous conduct of the tendering process in relation to the Springburn factory, the Minister should order an inquiry into what went wrong, why the process collapsed and how the hopes of workers were raised last month only to be so cruelly dashed by her letter of a few weeks ago. In particular, she needs to provide answers to questions being posed by workers at the factory and by one of Scotland’s major newspapers.

Last Wednesday, the Daily Record reported that Remploy Healthcare entered a deal with R Healthcare, otherwise known as R Link, in July 2011 to take over the “front end” of the business, including

“the sales, marketing and distribution of Remploy’s healthcare products.”

There are many people who believe that that contract may have endangered the probity of the tendering process for the sale of the Remploy Springburn factory. Workers at the factory believe that the contract, which was not made public at the time, sealed their fate as long ago as last year.

Will the Minister tell the Chamber why there has been such a lack of transparency on the existence of those contracts? How can she ensure that this tendering process and future tendering processes will operate on a level playing field for other potential buyers of the Springburn factory and any others? She will be aware of the concerns of Greentyre and other potential bidders—they felt excluded from the tendering process because of the link with R Healthcare. Why were the contracts kept secret only until the decision to close the factory was announced? Why has her Department refused my freedom of information requests on those contracts? The reply refusing the request was sent on the same morning as the confirmation that the factory would close. Does she really believe it reflects well on her Department that R Healthcare is planning to keep Remploy’s wheelchair order book, and to benefit from the business that will be released thereby, after dumping all the workers and closing the factory?

The Minister will remember from when we debated the issue previously that if the factory had been sold, the workers would have benefited from the protection of the TUPE regulations. If any workers are taken on by Haven, R Link’s subcontractor, they will not benefit from the protection of TUPE, which is the difference. If workers are fortunate enough to be re-engaged, they might be hired on markedly poorer terms and conditions. Such asset stripping should not be worthy of contracts issued under the aegis of her Department.

[Mr Jim Cunningham]

What my hon. Friend has revealed is nothing short of scandalous. Having said that, will he include the affected factories in Coventry and the rest of the UK in his proposals to the Minister?

[Mr Bain]

Absolutely. My hon. Friend is entirely right that, given the scale of the disaster being faced by people in the disabled community, the only answer is for there to be a moratorium so that this incompetent Government can produce a strategy for disabled employment that actually works.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House. Does he feel that perhaps this is the time for the Government to introduce a strategy that works alongside shops that need certain types of goods and alongside private enterprise so that the expertise of Remploy factories across the United Kingdom can be used for the good of the factories and the workers?

[Mr Bain]

I entirely agree with the hon. Gentleman. When I speak to workers in Remploy factories, it is clear that what they want is a level playing field, which comes down to public procurement rules and the proper interpretation and application of article 19 by the Government and other agencies. That would do a huge amount to secure a long-term future for factories that are able to stay open.

I specifically ask the Minister whether she sought advice from the Attorney-General on the propriety of the tendering process at the Springburn factory. Did she seek any advice about the possibility of a conflict of interest following the emergence of the contract between Remploy and R Healthcare, given that R Healthcare was the initial preferred bidder for the Springburn Remploy factory?

As with the Work programme, the pattern emerging with the Government is that public money is being handed over to private companies in outsourcing deals in which the private companies are the major beneficiaries. Are the internal audit procedures of the Minister’s Department satisfied that the contracts offer value for money to the taxpayer?

Surely with such a flawed process the only fair answer, so that Remploy employees in other factories under threat of closure can have confidence in the integrity of the tendering process, is for the entire closure programme to be halted so that an inquiry can be conducted by officials in the Minister’s Department. Is the Minister confident that the contract that has been revealed can withstand scrutiny if referred for investigation to the Public Accounts Committee? I have written to my right hon. Friend the Member for Barking (Margaret Hodge) about the matter this afternoon, seeking her advice on whether such a reference may be made.

I urge the Minister to think of the human cost of her actions or inaction today. I ask her to think what it would be like across the Christmas dinner tables of Springburn Remploy workers, with nothing to look forward to but near certain joblessness next year, and how much their families will suffer with them in the new year. How much more economic demand will be sucked out of my local community, and other local communities potentially affected by further factory closures, as people move from spending wages and paying taxes into the system to struggling on benefits with their spirits sapped?

I also urge the Minister to consider what will happen to Simon Yearling, a 35-year-old with Down’s syndrome, who has worked for 13 years in the Springburn Remploy factory. He is now under threat of the sack next year and, if he cannot find another job next year, could even be sent on an unpaid work placement on the threat of losing 70% of his disability benefits under the Government’s new rules on mandatory work placements introduced this week. Did his 68-year-old father not sum up the harm that this Government are doing to the fabric of our society when he said:

“If society can’t find some slot for the disabled, then society is in a poor way”?

Governments work in this country when they make decisions on the basis of evidence and compassion for those whom they serve. The evidence is in, and the results are clear: this Government’s plans for current and sacked disabled Remploy workers are failing badly. They need to change tack now, if we are to escape avoidable suffering and the biggest waste of all—the enforced idleness of productive, skilled and talented people in our society. The Minister has an opportunity to signal that change today and avert a terrible injustice to nearly 50 hard-working disabled people in my constituency. I hope she will take it.

16:32

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

It is a pleasure to serve under your chairmanship today, Mr Streeter. I thank the hon. Member for Glasgow North East (Mr Bain) for expressing his concerns passionately today. I hope that we have a constructive dialogue. I will bring him up to speed on everything that has been happening and that we have been doing on a daily basis. He and I have met and have spoken on many occasions, and I know how strongly he feels about the issue. I hope that he will give me credit for feeling as passionately and strongly as he does on the issue, and for working on it with my colleagues every day.

I shall start at the beginning—as they say, that is a good place to start—so that I can explain how and why the changes have come about. Obviously, amnesia has occurred among the Opposition about the closures, and the uncertain future, which have been going on for many years. In 2008, 29 factories were closed. A modernisation plan was put in place but failed, having set overly ambitious targets that were never achieved. As such, the factories became increasingly loss-making and their future became more precarious, which left all staff in a vulnerable position. The future must be about finding jobs for the employees and supporting them into mainstream employment. The issue is about sustainable jobs and a future with a job. That is precisely what we are trying to achieve.

The Government have committed themselves to protecting the budget of £320 million for specialist disability employment support. Governments of both parties have looked at the money going into Remploy factories and their future capability. One sixth of the entire budget has been going to Remploy factories, to 2,200 disabled people. Actually, there are 6.9 million people with disabilities of working age. We must look at what is best for all those people.

The hon. Gentleman gave incredibly negative figures, which I did not quite recognise. Remploy employment services, a different part of the organisation, has managed to find 50,000 jobs since 2010 for people with disabilities. In his constituency, 263 jobs were found in the past year. There are 44 disabled people in the Springburn factory, but we have to look at who we can help—and how best we can help them— among the 12,700 people with disabilities.

Without a shadow of a doubt, I understand how unsettling it must be for the people at Springburn, and that is why we have put in place a special £8 million package for personal help and support. It is the first time that has been done. No one tracked the staff in 2008, and no one put in a special package for them. There was no inadvertency when I mentioned the number of people from Remploy who had jobs. I answered accurately: the number was 35 people when we last met. I have been working on the matter daily, and I hope that the hon. Gentleman will be pleased to know that in the past few weeks, by changing on a daily basis, by looking at what has worked and by following best practice, we have quadrupled that to 129 people in employment. I am not saying that that is the best we can do, but by learning every day, we have considerably improved the number. Trust me—I will be following it up, and the number will get better.

[Mr Bain]

I do not doubt the Minister’s sincerity, but clearly, she must acknowledge that her plan is not working. The number of disabled people who are out of work is 63,000 higher now than it was a year ago. I welcome the fact that 11% of dismissed Remploy workers have now found some work, but what she has just announced does not scratch the surface of the jobs disasters for the disabled that she is presiding over. She must accept that.

[Esther McVey]

I do not accept that. I have explained clearly how many people we have found jobs for in the hon. Gentleman’s constituency in the past year and what we have done since then. Since the general election, 1 million new jobs have been created by the private sector. As I have said, the issue is about sustainable, long-term work.

I will give examples of what some Remploy staff have been doing. The numbers might be small, but they show that things are developing. Four former Remploy employees have set up their own co-operative business to undertake sewing machine working. They are now registered as a company and have been given advice and specialist training. They are opening their factory in Aberdeen. In Wigan, Red Rock Data Processing Services has started. It was set up by ex-Remploy managers, who have so far recruited two ex-staff in management positions. By Christmas, 16 people will be employed. In Oldham, four ex-employees have found work with Dekko Window Systems. People have also found work at Cornwall college in Camborne near Penzance, at Hayman Construction in Plymouth, and at Asda.

What we are seeing is what disability experts had envisaged: the issue is about mainstream work and having people work and fulfil their potential in every way. Where Remploy factories can remain viable, they will do. Where they can be bought out as co-operatives, they will be. Where we can have people working in mainstream work, we will support them as best we can.

[Jim McGovern]

The Minister has not yet covered procurement, but she has mentioned sewing machines. The Remploy factory in Dundee is based on textiles and fabrics and on manufacturing uniforms—

[Mr Gary Streeter (in the Chair)]

Order.

16:39

Sitting suspended for a Division in the House.

16:50

On resuming—

[Mr Gary Streeter (in the Chair)]

Order. Mr Jim McGovern is about to finish his intervention.

[Jim McGovern]

I did not realise that the Division bell had gone and I thought that I had said something out of order, so I am delighted to be called again.

The Minister was mentioning some of the functions in various factories. The Dundee factory is based mostly on textiles and the manufacturing of uniforms, and I hope that she will accept my invitation to see it at work. I have had discussions—

[Mr Gary Streeter (in the Chair)]

Order. There has been ample time for the intervention, if both parts are taken together, so I will allow just one more sentence.

[Jim McGovern]

I ask the Minister to make representations about uniforms to the Minister with responsibility for procurement, the hon. Member for Mid Worcestershire (Peter Luff), so that they can be produced in Dundee.

[Esther McVey]

I will indeed visit as many factories as I possibly can. I have been to several, and I have been up to Scotland recently—up in Edinburgh—so if I can and time permits, I will visit. Regarding procurement, I believe that a different Member now has that responsibility, but I will have a word with the relevant Minister.

Some right hon. and hon. Members have expressed concerns about the commercial process, but I am now satisfied that the Remploy commercial process has been open and transparent. It was published on 20 March on the Remploy website, which has communicated the outcome of the process at all stages and continues to do so. In the light of the assertions made by MPs, MSPs and the trade unions, I sought absolute assurances from the Remploy board that the commercial process for stage 1 was operated as published and that it allowed an equal opportunity for interested parties to submit a proposal for consideration. It is important to note that any assertions made—from all those who have made certain allegations—included no evidence of malpractice or wrongdoing as part of the commercial process.

The assurances provided by the Remploy board confirmed that: the commercial process was consistently delivered with equal opportunity for all interested parties, including in excess of five months for bids to be developed and submitted; the current preferred bid for Remploy Healthcare, excluding Springburn, remains the best value bid as a result of the commercial process; and the preferred bid will preserve the ongoing employment of 30 employees. The process was developed using expert advice on its design and structure, taking into account the need to ensure that employees and employee-led groups had an opportunity to take part actively and to develop robust bids. An independent panel was set up to provide independent assurance to the assessment process, because we recognised the need to ensure that proposals were robustly assessed. The panel played an active part in the assessment of bids at all stages of the commercial process.

To encourage employees and employee-led groups to take advantage of the opportunity, the Government made funding available, up to a maximum of £10,000, to be used for expert advice and support in developing proposals. The Government offered a time-limited, tapered wage subsidy, totalling £6,400, to successful bids for each eligible disabled member of staff as part of Remploy’s commercial process, again seeking to support the ongoing employment of as many Remploy disabled employees as possible. The offer of the wage incentive was a direct result of Remploy’s and the Department’s response to a number of proposals and of issues that were raised by bidders during the commercial process. To reflect such additional support, we extended the deadline for the submission of business plans, adding an extra three weeks to the time line.

Remploy’s preferred bidder for its Springburn factory put in bids for Springburn and for another of Remploy’s sites at Chesterfield. Unfortunately, Remploy has been advised by the preferred bidder that it no longer wishes to proceed with an offer for the Springburn site. There were no other viable bids for the factory, so it will now close. Remploy’s preferred bidder is, however, saving jobs at Chesterfield. The jobs saved might not be as many as people hoped for but, nevertheless, they are saving jobs. Without that bid, we are uncertain if there would have been a viable bid for Chesterfield. The design of Remploy’s commercial process has maximised the potential of the bids and proposals for the factories concerned but, clearly, that is not the end of the process. As with the factory in Wigan, where a new company has emerged, and in Aberdeen where a social enterprise has started, we are asking people to come forward with other bids and offers on how they would like to see the future of their Remploy factories, including Springburn.

I am grateful to hon. Members for raising the issues and for giving me the opportunity to set out what we are doing, how we are doing it and how best it can be done. I will continue to keep the House up to date with further developments for Springburn and other factories.

[Mr Bain]

For the record, can the Minister confirm whether she is happy to reopen the tendering process for the Springburn factory to allow other potential bidders to come forward? Given that, can she guarantee that no notices will be issued to workers before Christmas?

[Esther McVey]

The commercial process, which was robust and has been carried through, will not be reopened. As I explained, however, there is an opportunity now for people to come forward with their best and final offers, as with Aberdeen and Wigan. Equally, should Greentyre—as mentioned by the hon. Gentleman—wish to come forward, it may bid for the factory. That is what we are looking for and what we are doing with other factories.

The hon. Gentleman also mentioned article 19. Previous modernisation plans assumed a 130% increase in the Government procurement rules under article 19 but, in reality, that did not happen. Article 19 allows the use of sheltered employment to deliver services, but it has to be done in the context of value for money. If use of article 19 does not deliver value for money, it is not valid.

I hope that I have answered all the hon. Gentleman’s questions.

[Mr Jim Cunningham]

Will the Minister give way?

[Esther McVey]

We have a couple of minutes left, so I will take the intervention.

[Mr Cunningham]

Can the Minister publish the figures on people who have been made redundant from Remploy and found employment?

[Esther McVey]

I believe those figures are in the public domain. If they are not or if the hon. Gentleman needs clarity about them, I can provide them or break them down by factory.

If there are no more interventions or requests, I will come to a close. I know that the process will be long and that we are all passionate about the issue because we all want to see the best solution and conclusion possible but, as I have said in the past, all channels of communication are open. Not only do I meet with MPs, trade unions and MSPs, but I also work with ex-employees of Remploy.