Remploy

Geraint Davies Excerpts

Thursday 15th December 2011 Westminster Hall

[Ann Clwyd]

That is a very important point, because the quality of the work produced is also excellent. A focus on procurement is therefore key to the future development of the Remploy factories.

The unions argue that Remploy’s capacity has been driven down through bad management, making it possible for the Government to claim that Remploy is not working. If orders are gained through effective procurement policies, which they are in some areas, the unions argue that factories can work at full capacity and that they can be viable. Surely, the future of Remploy can be secured by enabling each individual factory to procure work and to work with other Remploy factories, if needs be.

[Geraint Davies (Swansea West) (Lab/Co-op)]

On that point, when I visited the Swansea factory in the spring, it was running under-capacity. I therefore visited the Driver and Vehicle Licensing Authority, the local authority, the university and the health authority. That factory is now running at full capacity with much higher margins. Does that not illustrate that there is a strategic problem and that there is an over-centralisation of UK management instead of sales teams being devolved to enable local factories to pick up orders from large clients based locally?

[Ann Clwyd]

I thank my hon. Friend for that remark. He wrote a very good article in the Western Mail last week on Remploy. I commend that article to my hon. Friends.

Remploy in Aberdare has failed to provide sufficient support to the factory since its so-called reprieve in 2008. Despite assurances, Remploy management have never made a concerted effort to make the Aberdare factory viable. There is a team of national sales staff—this picks up the point made by my hon. Friend the Member for Swansea West (Geraint Davies)—but they are all based in England and have generated little or no new work for the Aberdare factory. It is that model of procurement that urgently needs to change.

Across Remploy as a whole, major savings could be made by dealing with the over-staffing of management and senior management, the majority of whom are able-bodied. Savings could also be made by cutting the use of expensive outside consultants. The Sayce report suggested that Remploy factories could be taken over by worker co-operatives or mutuals. I hope that that is not just a cynical attempt by the Government to wash their hands of the Remploy factories. If there were an attempt to push a new model on Remploy without prior consultation or consent, it would obviously reflect very badly on the Government and be viewed as heavy-handed and top-down. Despite being among society’s most vulnerable people, disabled people should be treated like anybody else with dignity and respect.

Before the summer holidays, when I went to see the Secretary of State—the Minister was there as well—about my own factory, I questioned the quality of the information being provided by Remploy senior management, including to the Government. That was confirmed by a comment made during our meeting. It was said that my factory in Aberdare was part of the furniture business. I said, “Well, that’s news to me.” When I went to the factory a few days later, the people there confirmed that they do not make furniture—they make window boxes. I suppose that window boxes are furniture to some people, but they are not normally considered to be furniture.

The Aberdare factory still manufactures some items for the health care business. That was one of the main things it did that was taken away from it some years ago as a result of some fatuous reasoning. The manufacture of those items was transferred to Chesterfield. I have no objection to people in Chesterfield having a job, but not at the expense of my own factory. As I have said, we still manufacture some items for the health care business, including a subcontracted footwear contract from the Chesterfield factory. That seems to be a rather ridiculous situation that is like a sort of yo-yo approach. There is also a bra pocketing service and the manufacture of lumber supports. So the factory was not making furniture, and I question some of the things that are said to happen in certain places.

Finally, according to the economists, we know that unemployment is on course to hit 3 million for the first time in 20 years. It is clear that wide-ranging job cuts in the public sector are simply not being absorbed by the private sector. Those jobs are just not there in the private sector. It is the hallmark of a civilised society that it ensures that its most vulnerable people are protected. Those people should not be left to compete in a savage labour market, where hundreds of thousands more people will lose their jobs in the coming months. It will be hard enough for the able-bodied, but please let us safeguard Remploy and all who work within it.

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[Stephen Lloyd]

I thank the hon. Gentleman for making that incredibly important point. The variability of the support that disabled people need is absolutely vast—it is like a length of string. Let me give an example. I missed a vote a few months after I was elected, because I did not hear the Division bell, which is not surprising, because I am half deaf. What was the solution? I made an adjustment in my office in Norman Shaw North, and I now have a flashing light there; it is not complicated, but there are some advantages. Of course, a lot of us in this Chamber sometimes appreciate it if we do not hear the Division bell, but that is by the bye.

However, that is a good example of what we are talking about. My disability is pretty minor—I have been hard of hearing ever since I got measles when I was six or seven years old—and one can accommodate it quite easily. However, someone with, say, profound mobility problems will need more support than someone like me, and someone with severe mental health issues will need even more support. I therefore entirely agree that this is not black and white, and it is not easy to pigeonhole people. If Access to Work is done properly, however, and there are other supporting mechanisms, it can be very effective, even for people with a profound disability, as I will explain a bit later.

Remploy employs 2,800 people, whereas Access to Work currently supports 37,000 and could support 70,000 if the budget were used better. Furthermore—this is unpopular but important—there are few new entrants to Remploy factories, as more and more disabled people are supported in moving to open employment. Given what the right hon. Member for Cynon Valley said, I am absolutely certain that some of the factories in the group are, despicably, not taking on some of the disabled people they should be; I cannot prove that, but I am sure she is right. However, one of the main reasons they are not taking on as many disabled people as they used to is that more and more of those who want to work are getting support to help them move into open employment.

[Geraint Davies]

Swansea Remploy, which I mentioned, is very productive and effective, but the voluntary redundancy scheme there and elsewhere was in danger of taking key people out of the production chain. Currently, Remploy’s management has imposed a virtual employment freeze; the factory is, for instance, looking for a design technician, which is holding back orders. In other words, the Government and Remploy’s management are preventing Remploy from succeeding, contrary to what the hon. Gentleman suggests.

[Stephen Lloyd]

I thank the hon. Gentleman for that intervention, but I am not sure it is true. That is the same situation as we had years ago—it really is. These things have not come out of the woodwork under this Government.

[Geraint Davies]

I got that information first hand on a visit to Remploy in Swansea last week. It has a showroom and it is getting new people in ordering things, but it faces production constraints because it cannot recruit the right people. It wants to recruit more people and to be more successful, but it is being held back.

[Stephen Lloyd]

I thank the hon. Gentleman for his further intervention. As I will explain later, the Remploy model needs changing. Remploy’s corporate size is a disadvantage and makes it very sclerotic, so it cannot move swiftly to adapt to circumstances. The Government need to be more creative about how Remploy factories and branches within the corporate body act. I do not deny what the hon. Gentleman says—indeed, I am sure it is true—but I guarantee that it could have been said 10 years ago. I absolutely promise that, because I know the subject.

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[Geraint Davies (Swansea West) (Lab/Co-op)]

I will be brief because other hon. Members wish to speak. I have already said that active intervention locally can make a difference, and in my discussions with the Driver and Vehicle Licensing Agency, the university and the health authority, we transformed the sales of the Swansea factory, quadrupled turnover and increased gross margins by tenfold. That is a case for more localised management and sales support and for removing the cap on overall marketing expenditure, which is less than 1% of turnover. All marketing literature must be checked by civil servants who have no idea about local needs.

My second point is about subsidies. The Sayce report states that the average subsidy is £23,000, but averages can be misleading. We all know that the cost of someone being unemployed is normally about £10,000 in benefits and lost tax. In the case of many of the people who work for Remploy, it would be much more because of the health on-costs. That needs to be properly evaluated financially.

Remploy works across a diverse range of markets. There is a case for focusing on whether there are greater growth opportunities and for examining the different business cases, rather than saying that it is a case of either closing all the factories or keeping them all and having no change. I do not think that anyone is arguing for no change.

There is a case for focusing on people with severe disabilities. Obviously, those with particularly severe disabilities need particular subsidies and support if they have virtually no chance of securing other forms of employment. There is a case for considering specific labour markets. In areas with very high unemployment, it is clear that those people will not get a job. There is a case for considering public procurement, as has been said.

It is also important to consider the specialist opportunities in relation to Remploy. For instance, Swansea Remploy is a specialist provider for young offender institutions in Scotland. It makes furniture that young offenders cannot destroy. They cannot break those things; there are no screws that they can pull out. It also provides furniture for mental institutions so that the residents cannot self-harm. The value is in tailor-made, focused transactions, where delivery is within budget and within the time frame. As I have already mentioned, it is important to ensure that key players and key skills are there to make the factories succeed.

People have mentioned that the factories provide an opportunity for training. Training is vital in manufacturing if we are to get back into growth and stop focusing completely on cuts. Clearly, if we just sell off the factories, we will see a fire sale of capital assets and the loss of the skills for ever. That is not sound financial management.

My basic theme is this. Let us focus on what works and make it work better. Let us accept that people with disabilities of varying sorts need subsidies. No one is saying that they can go off and succeed without any support. Let us use the levers at our disposal to make that work and stop just thinking about how we go about closing down 54 factories and making 2,500 people redundant. Those people are valuable assets in society, in our economy and in our future. Let us keep them doing that.

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[Maria Miller]

I thank the hon. Lady for her intervention. We have met on several occasions to discuss the issue. There are examples of areas where there can be success. Indeed, the hon. Member for Swansea West has walked the talk and made sure that the procurement issue has been uppermost in his local authority’s mind, and he has been very successful in that regard. There are opportunities for success, but the problem is that that success is not across the board.

I have already confirmed that the amount of money going into specialist disability employment is not the issue, because we have protected that pot of money. This is about ensuring that that money works hardest for disabled people. This is not about reducing funding; it is about using the money most effectively in whatever way that comes about. We have to consider those alternatives.

I have met Remploy trade union representatives on a number of occasions to discuss the matter. I have visited factories and listened to the views of employees, and I attended one of the consultation events in Reading in September. Let me restate that the Government’s commitment is to the five-year modernisation plan introduced in 2008. We are now in year four of that and those targets are not being met.

Last week, Remploy published independently audited annual reports and financial statements for 2010-11, which revealed that the Department for Work and Pensions spent £68.3 million supporting 2,200 disabled people in Remploy enterprise businesses at an annual cost of £25,000 per person. That is £5 million more than in 2009-10 and is more than 20% of the total budget available to help disabled people into work through the specialist employment budgets. We have to take a long hard look at the situation.

[Geraint Davies]

Does the Minister accept that there is a case for some job subsidy, even if it is as low as the amount that that person would otherwise be paid for unemployment benefit and health on-costs, or is she going to stick to her guns and say that there should be no subsidy and we should therefore make a loss to the Exchequer?

[Maria Miller]

The hon. Gentleman asks a very detailed question. He knows that we have not yet made the decision about the way forward. A significant amount of money is available to support disabled people. My hon. Friend the Member for Eastbourne talked about the Access to Work programme, which he rightly said is exceptionally effective. The Sayce report clearly says that if decisions are made about the prioritisation of the available money, more money—significant amounts of money—could be yielded to support Access to Work. That could well be the sort of support that the hon. Gentleman’s constituents in Swansea West would want.