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Strategic Direction for Remploy

Volume 449: debated on Wednesday 19 July 2006

Increasing the number of disabled people that we support into work is a core part of our Welfare Reform agenda. This is central to meeting the Department's aim of an 80 per cent. employment rate, and central to ensuring equality of opportunity for disabled people.

Remploy was set up after the Second World War to provide employment to facilitate rehabilitation and progression to open employment. Employing around 5,000 disabled people, the Remploy factories are engaged in a wide range of sectors ranging from office furniture through textiles to electronics. These industry sectors have experienced significant change over the last sixty years—not least through increased international competition.

In addition, the way in which we support disabled people into work has evolved. Strengthened disability rights mean that we are now in a stronger position to support people in a mainstream environment. This is why Remploy developed its Interwork business—which supported 4,300 people into jobs in 2005.

These changes have raised significant questions about the future strategy for Remploy. That is why in March I commissioned PricewaterhouseCoopers and Stephen Duckworth (a disability expert with wide experience of disability rights and employment issues) to conduct a strategic review of the future business options for the company.

Today I have published the findings of the review. Copies of the PricewaterhouseCoopers report have been made available in the Libraries, Vote and Printed Paper Offices and on the DWP website http://www.dwp.gov.uk/publications/dwp/2006/remploy

The report delivers a hard-hitting financial assessment of the challenges facing Remploy.

Factories are facing growing cost pressures as a result of increased international competition and technological development

The average cost per employee is £18,000 per year and over £48,000 in the household and toiletries factory— far greater than say the £5,000 cost per head of other WORKSTEP providers.

The report sets out a range of possible scenarios for the business—from no change to complete closure of the factory network. I am ruling out both of these options.

It is clear from both this report and that of the National Audit Office that doing nothing is not an option. This view is shared by the Remploy Board, its management and the trade unions. The necessity for change is clear, but I believe there is still a role for sheltered employment in the future.

We recognise that change will have an inevitable impact on the disabled people Remploy employs. We want to give Remploy the time and support to determine the best way to modernise and restructure its business. We intend therefore to provide the necessary funding to enable this to happen, in particular so there is sufficient time to consider factory reorganisation as part of an overall restructuring package. This is not a cuts package for Remploy; on the contrary we will be maintaining the baseline funding and investing more this year to help deal with the short term issues.

I will be asking the Board of Remploy to undertake the preliminary work to bring forward later next year a five year restructuring plan with proposals both to modernise the business and to support substantially larger numbers of disabled people into work. Full consultation will take place with the trade unions and employees in developing this strategy. I will be making clear that any such proposals must protect Remploy's disabled employees from compulsory redundancy. Once this plan is brought forward, we will consider whether we are able to offer the Board additional funding for modernisation and we will also consider at that stage with the Chair whether we need to enhance the range of skills on the Board to help them to do this.

Currently Remploy supports around 9,000 disabled people in factory employment, Interwork and managed services. In the longer term our ambition is that any restructuring should enable us to help significantly more disabled people in work than if we continue with the status quo thus providing substantially more opportunities for disabled people and better value for the taxpayer.

The efforts of Remploy's existing workforce, its Chair and current Board, and its supporters must not be under-estimated or taken for granted. They have much to be proud of. But Remploy cannot stand still and we need to examine how the ideals which lay behind its creation 60 years ago can fit the world which it now faces.