My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend Peter Hain, the Secretary of State for Work and Pensions. The Statement is as follows:

“I wish to make a Statement on the modernisation of Remploy. Since Remploy was founded in 1945, it has played a central role in the lives of thousands of disabled men and women by providing supported employment for those who need it and, increasingly, placing others in mainstream employment.

“Both as a local MP and as a Minister, I have for the past 17 years worked closely with and supported Remploy and, as Secretary of State for Work and Pensions, Remploy workers will continue to have my full support. May I also record the grateful thanks of the House for the diligence and commitment of my honourable friend the Minister for Disabled People?

“Of course, the world has developed dramatically since the end of the Second World War, not least in how the aspirations and expectations of disabled people have changed, and changed for the better. The vast majority want jobs in mainstream employment, and that is the Government’s priority. That is why we extended the scope of the Disability Discrimination Act. That is why we have been transforming the support that we give to disabled people, moving away from a system that abandons people at the margins to one which helps them to realise their potential.

“That is why we spent £66 million last year on the Workstep programme to support 17,000 people. That is why we spent £62 million on Access to Work to help 24,000 people. These programmes are already helping disabled people to take their place in an inclusive society. That is why we are introducing the employment and support allowance which will replace incapacity benefit next autumn. That is why we are extending Pathways to Work across the country by April of next year, offering tailored support to help people on incapacity benefit back into work. That is why last year, Remploy’s employment services division placed 5,000 disabled people into mainstream employment, for the first time outstripping the number employed by the factory network.

“We have helped more disabled people into jobs than ever before. For example, since 2001, the New Deal for Disabled People has helped more than 150,000 into work. None the less, there remains a vital role for supported employment, providing a chance to work for thousands of disabled people who might not otherwise be immediately ready for mainstream work. That has been a central part of Remploy’s work since it was founded. But increasingly, Remploy has struggled to fulfil its role effectively.

“Low-wage, low-skill competition from countries such as China and the EU accession states have put Remploy factories under enormous pressure. In turn, Remploy has failed adequately to move into higher value, higher skill work. Losses have spiralled, and Remploy’s ability to support disabled people has been put at risk. Change is therefore essential for Remploy’s 83 factories across the country, and the 5,000 people they employ.

“Following the National Audit Office’s report in 2005 and the independent report by PricewaterhouseCoopers and Dr. Stephen Duckworth of Disability Matters last summer, Ministers asked Remploy to develop a new five-year restructuring plan. This was to modernise the business, avoid compulsory redundancy for Remploy’s disabled workers, support substantially larger numbers of disabled people into mainstream work, and to stay within a funding envelope of a £550 million taxpayer subsidy over five years to ensure that escalating costs do not put at risk funding for other DWP programmes for disabled people.

“The reality is that without modernisation, Remploy deficits would obliterate our other programmes to help disabled people into mainstream work. With no change, on current trends, in five years’ time Remploy would require £171 million a year—in other words £60 million over the £111 million funding envelope. This represents nearly the entire current annual Workstep budget.

“In May 2007 Remploy proposed for consultation with the trade unions to close or merge 43 of the 83 Remploy factories. But when I took over as Secretary of State a month later, it was clear that national and local management had not exhausted procurement opportunities to maintain the maximum number of Remploy sites. There was a huge gulf between Remploy management and the trade unions, and the likelihood of destructive confrontation. So, in August, I asked Roger Poole, a former assistant general secretary of Unison to act as the independent chairman of fresh negotiations. I record my thanks for the way in which he managed to achieve real dialogue and progress.

Although there was no agreement on factory closures, there was for the first time very significant common ground. There was agreement on: the £555 million funding subsidy; quadrupling to 20,000 the number of disabled people Remploy would help into mainstream work; significant cuts in management jobs and costs; more efficient working practices; the vital importance of generating more public sector contracts and, in consequence, the need for fewer factory closures.

“In September I reaffirmed government policy on Remploy: that everyone should do their utmost to get a negotiated outcome; no factory closures without ministerial agreement; and that all public authorities should be encouraged to take advantage of European procurement rules allowing contracts to be reserved for supported businesses. I reaffirmed, as I do again today, that there would be no compulsory redundancies for Remploy’s disabled workers and that they would retain the protection of Remploy’s terms and conditions, including—uniquely for workers facing plant closures or transfers—their salaries and final salary pensions. Both workers and management now need certainty to end the insecurity and worry for Remploy employees and their families, and to allow Remploy management to begin the radical changes that we all recognise are needed.

“The final proposals I am announcing today represent the best package for Remploy’s disabled employees in these difficult circumstances. Copies of the modernisation plan are available in the Vote Office and a letter with agreed proposals to the trade unions has been deposited in the Library. There will be 15 fewer factory closures with 55 factories remaining open and 11 merging—down from 32 closures to 17. The sales target for public sector procurement will increase to £461 million over five years, up from £298 million since the company’s proposal in May. This is a huge and challenging 130 per cent increase over the current rate of sales of £200 million. There will be a cost saving of £59 million from around 25 per cent fewer managers, changes in working practices and reductions in non-wage costs.

“Last week I had productive discussions with the leaders of the GMB, Unite and Community, joined by Remploy chairman, Ian Russell. I pay tribute to Ian Russell for his energy and commitment to get the best for Remploy workers. As a result we have reached further agreements to protect Remploy’s future and its workers. New skills in public procurement will be brought in to ensure that its marketing and sales effort is targeted appropriately. Appropriate employment advice will be available to all disabled employees whose factories are closing. Remploy will provide a travel-to-work package wherever necessary, when employees transfer as a result of mergers.

“Furthermore, Remploy has been contacted by third parties interested in keeping some form of production or training at six of the sites due for closure: Lydney, Glasgow Hillington, St Helens, Treforest, Ystradgynlais and Brynamman. At four other sites—Mansfield, Pinxton, Plymouth and York—there is the possibility of staff transfers to nearby and mostly local authority-supported plants.

“I know that there will be disappointment that we are unable to keep even more factories open but the reality is that it is simply not viable. For those sites, including those mentioned above, my message is this: if management, trade unions, MPs and others come up with a credible option involving a takeover or transfer, we will of course co-operate and Remploy will help facilitate. But time is very short. The new funding envelope starts in four months from 1 April 2008. We have managed to keep open 55 sites only on the basis of very stretching procurement targets and a tough forward plan. It will be up to everyone with an interest in Remploy— government, management, trade unions, local MPs and other political representatives—to pull together to ensure that these factories meet their ambitious targets. Otherwise, they too could be put at risk.

“The proposals I have presented today are both realistic about the challenges facing Remploy and ambitious for the future. The plan makes some difficult choices, and many in the House would wish that circumstances were different. But we are where we are. What is now vital is that everyone concentrates their efforts on making the new Remploy a success. There will be a top-to-bottom restructuring and reskilling of Remploy. This plan will deliver a new beginning for Remploy requiring a radically new approach across the entire operation, which must include better management and better union relations. Last week, I agreed with union leaders that the modernisation and procurement plan will be properly monitored to ensure that it remains on course, so that Remploy can look to the future with a degree of confidence not enjoyed for some years. The people it was set up to serve deserve no less. I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I am grateful to the Minister for repeating the Statement on the future of Remploy, which, as the Statement says, was set up after the war to give employment to disabled people. The Statement is an amelioration of the original proposals, which were designed to reduce the losses, and hence the government subsidy, to Remploy which have been going on for some time.

As long ago as 2005 the National Audit Office described many of the factories as “unsustainable”. We also learn that, under the department’s normal scheme, the cost of supporting a disabled person into a mainstream job is £5,300. By contrast, the average cost of supporting a disabled person in a Remploy factory has increased inexorably from £11,400 a year in 1994 to more than £20,000 today. I assume that the figures which I have just read out are in today’s prices; perhaps the Minister can confirm that. If they are, that is of course an exponential increase.

The proposals in this Statement affect many employees who already live the most difficult of lives, which most of us cannot imagine—people whose lives will be totally disrupted as a result. I do not know, and the Statement does not reveal, just how many disabled people—people, your Lordships will remember, who are pursuing active employment—will lose their jobs in the factories due for closure. Just how many people will be made redundant? Can the Minister tell us, too, whether, in the 11 mergers that are to take place, any redundancies are envisaged? Clearly it is the case that managers will have to go, but I am more concerned with the shop-floor employees.

Whatever the answers to these questions, we are used to government Statements starting in what I rather irreverently like to think of as the gung-ho tones of the noble Lord, Lord Jones of Birmingham, so the first three and half pages of this one come as no surprise. However, is it not a bit rich for the Secretary of State to claim, by implication anyway, that Remploy was in the minds of Ministers when they planned the Disability Discrimination Bill? During the debates in this House—I stand to be corrected on this—I do not recall Remploy being mentioned at all.

Nevertheless, I share with the Government the objective of having as many disabled people as possible in mainstream work. That may—may—be the result of the Welfare Reform Act, which, as the House will remember, is intended to reduce the number of people claiming incapacity benefit. Under current proposals, however, it is only the newly disabled people who will attract the employment and support allowance which replaces IB.

Be that as it may, today I am concerned with a small but important group of disabled people who are employed by Remploy. It helps to place them in mainstream employment. Earlier this year, we heard of plans to close 32 and merge 11 of its 83 factories. Until late September, this was to happen. However, the pre-non-election Labour Party conference changed all that, and we now know the Government’s revised plans. The Statement describes these plans as “final”, involving the closure of 17 factories—a reduction from 32, but 11 are still to merge.

Ministers are to be urged to use their powers to allocate public sector procurement contracts to Remploy. The new Remploy plan intends to increase such sales by about 35 per cent, from £298 million to £461 million. While this is not a new pledge, I would like to know what progress has been made with other departments in this regard.

The Government also pledged that no individual factory would close without direct ministerial approval. Is that still the case? Will the Minister list those factories that are to close? I know that a close reading of the modernisation plan—I am grateful to the Minister for putting it in the Printed Paper Office—will give me the answer. However, I think the word for it is probably “verbose”. There are so many words that it is difficult to extract, in the short period I have had available, a simple list from the rationale of each factory. I hope that the Minister, even if he cannot do it now—and perhaps that would not be appropriate—will be prepared to reply to that point by means of a Written Answer.

While I am asking questions, the Statement speaks of ambitious targets. On page 7, it speaks of,

“quadrupling to 20,000 the number of disabled people Remploy would help into mainstream work”.

Given the reduction in the number of factories and the amalgamation of others, how exactly will the rise from 5,000 to 20,000 be achieved?

Finally, I note that the major charities agree that Remploy must be restructured, as do the relevant unions. I agree with them. On these Benches, however, we will be watching carefully for signs that those employees who can no longer have a Remploy job will be transferred to private sector employment, if necessary with a short period on the new employment and support allowance.

My Lords, I thank the Minister for repeating the Statement. It will mean that more Remploy factories can stay open through better marketing and procurement of Remploy products. We welcome that, but clearly no Government can give a blank cheque to keep factories open indefinitely where they have no realistic long-term prospect of paying their way in the face of low-cost competition in low-value-added activities from the Far East. That has frankly been the problem for many of the Remploy factories.

We therefore agree that promoting mainstream employment must be the right way to deliver independent living, and expanding Remploy’s successful programmes is the right way to do that. Can the Minister confirm that the expansion of Remploy’s inter-work programme to help 20,000 people into mainstream work every year will still go ahead? The noble Lord, Lord Skelmersdale, rightly referred to the extremely ambitious targets, as the Secretary of State calls them. His letter to Paul Kenny of the GMB, referring to both extremely ambitious targets for sales and stretching procurement targets, feels rather like Sir Humphrey in “Yes Minister” saying “Very bold” to some scheme that he thinks looks frankly pretty wild.

So while it is a nice surprise to hear extreme ambition from the DWP for a change, what is going to happen if the targets are not met? Will the priority be retaining factories or helping many more disabled people into work? Will the Secretary of State provide additional support for Remploy if it needs it to meet its target of 20,000 people?

Today’s Statement is still a real shock to the current Remploy workforce, often working, it is fair to say, in a happy family atmosphere, many of them for many years, in factories to be closed. That is like a bereavement. We should always remember that work is not just about money; it is people’s lives.

There is also quite a strong regional dimension to this. One just has to listen to the Minister reading out the list of factories to be closed: Lydney, Glasgow Hillington, St Helens, Treforest, Ystradgynlais and Brynamman. Many of them are in areas where it will not be easy for people to get another job, and unfortunately I am afraid that we again see the complete failure of government economic policy, with so much economic activity and growth over the past 10 years going on in the overheated south-east. Over what time period will the closures be phased? How long will the affected employees have to find alternative employment? Is there additional capacity to help provide the counselling and skill-focused help needed for workers in these areas?

As the Statement said, the announcement cannot be isolated from wider policies for helping people into work, but will the Government put their money where their mouth is on the procurement proposals? It is all very well to have an ambitious target, and we know the DWP has done its stuff on this, but many departments have not followed the DWP; indeed, many are using no Remploy products or services. What will happen to encourage Cabinet colleagues to improve on that record and set an example for the public sector? The Government have a responsibility to help all disabled people into work. Until they really get on with it, the warm words of reassurance we have been hearing will bring cold comfort to disabled people, including thousands of loyal and long-standing employees of Remploy.

My Lords, I start by thanking the noble Lords, Lord Skelmersdale and Lord Oakeshott, for their contributions. I believe we are at one in agreeing that helping disabled people into mainstream employment is an objective that we share and should be promoting.

I shall try to deal with the specific points raised. The noble Lord, Lord Skelmersdale, asked about costings and the 5,000 and the 20,000 people. Those are outturn prices, but he is right that, as the Statement recognises, that is a very steep increase in the cost and support per individual employee, which is why, under the new proposals, one of the monitoring arrangements is to see that factories reduce that to £9,000 per year by 2013.

I reiterate that there will be no compulsory redundancies for disabled people. It is expected that there will be 200 compulsory redundancies for non-disabled people. We expect that between 70 and 80 managers will be affected. I take this opportunity to stress the support that will be available for disabled people, a matter that was raised by the noble Lord, Lord Oakeshott. Not only will there be no compulsory redundancies, but they can stay on Remploy terms and conditions. Disabled workers will be offered a period in which to consider their options. They include a job with a mainstream employer, with support if necessary, on Remploy’s terms and conditions; additional training and development to facilitate a move into mainstream employment; creating a job with an employer on a subsidised basis; being placed with a charity or similar organisation as a transitional activity; being placed in another supportive workshop or a local authority workshop; a permanent placement with a charity or social organisation; and, for those where there has been a merger of factories, the opportunity to transfer to another Remploy factory. If any disabled person does not wish to continue with any of those options, he will have the opportunity of a voluntary redundancy package; voluntary redundancy and help to find another job; or voluntary early retirement with a redundancy payment, where eligible. I believe noble Lords will agree that there is substantial support in the challenging exercise we are facing.

Both noble Lords raised procurement and what has happened so far. Ministers have arranged meetings with other government departments to discuss public procurement opportunities. Those meetings, which involve trades unions, officials and Remploy, are ongoing, and the PM has given his support to that effort. Alongside that, the management of Remploy is required under the proposals to come forward within three months with specific proposals for the various business streams.

The noble Lord, Lord Oakeshott, asked over what period the closures will be phased. The process will begin from 1 December and closures are expected to be completed by 31 March 2008 since the new funding envelope will be put in place from 1 April 2008. Additional support will be provided; the modernisation fund will provide £111 million in addition to the £555 million envelope of support.

The noble Lord, Lord Oakeshott, asked us to confirm that the expansion in the employment services will still go ahead. The answer is yes. The plan includes £164 million for expanding the employment services, and that money will be ring-fenced. That also addresses the point raised by the noble Lord, Lord Skelmersdale, about how we are going to achieve the target of 20,000 people a year being helped into mainstream employment.

Not quite, my Lords. It is clear that if there are fewer factories and the number of disabled people being helped into employment through them is to be quadrupled, a lot more work must be produced from those factories. That is what I was getting at, and that is what I would eventually like an answer about.

My Lords, we are talking about opportunities with other employers, not in the supported factories. That is what happens at the moment. When we are talking about supported work, we are partly talking about those who are supported by being directly employed by the factory network and partly about people being supported in other employment through a range of programmes and flexible support. Both of those things happen at the moment, and we see the latter component as the key to hitting the 20,000 target.

The noble Lord asked us to list the particular sites. I am happy to list the sites proposed for closure, but I will make sure that a full list is available. They are: Aintree, Brixton, Halifax, Hartlepool, Hillington, Hull, Leatherhead, Lydney, Mansfield, Medway, Pinxton, Plymouth, Southend, St Helens, Stockton, Treforest and York. In repeating the Statement, I made the point that in some cases proposals are already coming forward from local communities and others to rebadge some opportunities so that those locations do not necessarily disappear from the network in their entirety.

I was asked what will happen if the targets are not met. The remaining 55 factories will need to make satisfactory progress towards reducing the cost of employing disabled people—I mentioned the £9,000 subsidy—and in addition factories that have been kept open as a result of the further look will potentially have additional targets to meet, so the monitoring of this plan is very important.

I shall review the record, and if I have not answered all the questions I shall write further.

My Lords, the noble Lord mentioned monitoring. In his letter to Mr Kenny, the Secretary of State said the monitoring group would report to Ministers. Could it also report to Parliament?

My Lords, I am sure there will be opportunities for us to discuss and report back, but if there is no formal process, noble Lords are experienced at asking appropriate Questions and holding Ministers to account, which is as it should be. I shall take this opportunity to emphasise that the key points in this are reskilling and the top-to-bottom reorganisation of Remploy. We do not believe that the management in general has done a particularly good job. Getting the skills right and public and private sector procurement are vital.

My Lords, I thank my noble friend for repeating the Statement. When I was at the TUC in September this year, there was a large demonstration by Remploy employees at a time when the Secretary of State, my right honourable friend Peter Hain, was attending congress. It was clear that the people concerned were suffering a great deal of shock at the possibility of Remploy modernisation and what could happen to their factories and jobs. In response to their demonstration, they were promised that there would be no compulsory redundancies. They were quite pleased about that, but all of us who have had anything to do with industrial relations know that “no compulsory redundancies” does not necessarily mean no redundancies. People will find that their jobs no longer exist if their factory closes. They have the double disadvantage not only of having no job because the factory has closed but of being disabled, so their transfer to mainstream employment may be particularly difficult for them because they have been used to working in a protected environment in a Remploy factory.

I therefore welcome the detailed questions that have been put by noble Lords on the other side, particularly by the noble Lord, Lord Skelmersdale, because the questions that he has raised are very important. I would like to ensure that there is a report back on how progress is being made on this reorganisation. When reorganisation is mentioned, people immediately wonder whether their job is safe. Very often it is not. The factory may close and there may be no job at all for them, except in another area to which they have to transfer. It may not be possible for them to transfer, and there is the emotional difficulty of losing the security that they have lived with for many years. This is a very serious matter for Remploy employees, which I am sure my noble friend understands.

My Lords, I thank my noble friend for her contribution. I agree and acknowledge, as I think we all do, that this has been an unsettling period for Remploy employees. That is why we have had to reach conclusions and make them clear, as my right honourable friend the Secretary of State did in his Statement today.

The promise of no compulsory redundancies for disabled people has been, and I believe will be, met; that is clearly on the record. As I mentioned a moment ago, a range of components of the offer is available to disabled workers. There are, for example, jobs in mainstream employment, additional training, jobs created specifically as I have outlined, and placements in charities or similar organisations. There is a whole raft of support and the opportunity for them to retain their Remploy terms and conditions, including access to the pension scheme. I hope that that will in some measure ameliorate people’s concern.

When the plan was drawn up and identified the factories that should be closed, account was taken not only of factories with low volumes and low margins but of the prospects for being able to help people in those areas into other employment opportunities. That analysis on behalf of the workforce was a component of the decision-making process.

My Lords, most people who are familiar with Remploy would accept that modernisation was inevitable, if not overdue. They would also recognise that the Government and Remploy have worked very hard to put a generous package of support in place for the disabled workers who are affected by this restructure.

As a number of charities representing disabled people have stressed, a refocusing of Remploy’s work towards integrating disabled people into mainstream jobs is also very welcome. Does the Minister accept, however, that although that refocusing towards mainstream employment is obviously at the heart of what Remploy should be about, it is also important that Remploy factories are used to provide a network—a hub—of centres for supported mainstream employment across the country, as suggested by the group of MPs, chaired by Helen Goodman, who studied these proposals? This network of centres would also provide worthwhile jobs for those whose progression into mainstream employment was not a realistic possibility at the moment or at any time.

My Lords, I thank the noble Lord for his comments. I think we agree across the Chamber that the refocus in helping people into mainstream employment is right, which is a large part of the thrust of the Statement today, and that we should ensure that a proper network remains to help people who need supported employment. At the end of the day, 55 factories across the country will remain open. Importantly, the announcement today seeks to ensure that that network of 55 factories is viable and sustainable and does not pre-empt the resources that are needed for the other vital work of getting people into mainstream employment. So, yes, I do agree with that.

My Lords, the Minister has been asked twice—once by his own Back-Benchers and once by the Liberal spokesman—for a formal report back to this House. It is not sufficient for him to say that there are devious ways to get at him. This is too important to be treated in such a manner, so can we have a categoric assurance from the Minister that there will be a formal report back from the Government on progress?

My Lords, I am sorry; I did not wish to appear frivolous in my response. Let me comment on two things. First, as I mentioned, a monitoring group has been set up to oversee this plan. The group will be staffed by DWP officials, with places reserved for senior individuals nominated by the trade unions and for the chair and chief executive of Remploy. So there will be a process of regular monitoring and discussion by that group. That proposal does not build in a formal report back to Parliament, but there is no difficulty in me giving an undertaking that we keep the House in touch with that group’s deliberations. Perhaps that can be used as the channel to inform noble Lords.

My Lords, I, too, welcome the Statement on Remploy repeated on behalf of the Secretary of State. I am sure that Remploy employees will be reassured by much of what is being said. I have a couple of points to make. Some noble Lords mentioned our bold ambition. With great respect, I do not believe that any ambition can be bold enough to address the issue of mainstreaming disabled workers, which is absolutely critical to the legitimacy of the business of government.

Will the Minister say whether the monitoring group to which he has referred is independent? If not, what independent element will be available to the monitoring group to ensure that the best interests of disabled workers are in the forefront of everyone’s mind? Given the new ambition and the new target for mainstream employment solutions for disabled workers, I very much want to inquire whether consideration will be given to beginning negotiations with some of the NGOs in this area about providing some of those supported work placements and work experience, because the existence of Remploy may have institutionalised for far too long—unacceptably so in my humble opinion—the rights of disabled workers and the obligations of institutions, including our own Government.

My Lords, I thank my noble friend. This is ambitious, and I agree that no ambition should be too high in helping and supporting disabled people, particularly in relation to employment. I stress, however, just how challenging that procurement target is—a 130 per cent increase on where we started. A lot of effort must go into that.

My noble friend asked whether NGOs and other bodies are engaged in this process. There has already been engagement with some of the charities, which have acknowledged that they would be able to offer transitional or perhaps permanent employment to people who would be displaced where a particular factory was being closed. That sort of work is already under way. The more of that that we can see, the better.