Remploy Factory (Rutherglen)

– in the House of Commons at 9:45 pm on 13th July 1989.

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Motion made, and Question proposed, That this House do now adjourn—[Mr. Lightbown.]

Photo of Thomas McAvoy Thomas McAvoy , Glasgow Rutherglen 10:11 pm, 13th July 1989

The purpose of the debate is to highlight the decision by Remploy to close its Rutherglen factory on safety grounds and relocate its 83 disabled workers at its Clydebank factory. The Rutherglen factory draws its work force from Rutherglen, Cambuslang, Castlemilk and south-east Glasgow, with a large proportion from East Kilbride. The catchment area is therefore very wide. If the factory were closed, there would be no employment opportunities for disabled people within that large area. All those places are further away from Clydebank than the present site and any workers who transferred would be faced with an additional 10 miles of travel, on top of the difficulties that they already face getting to the Rutherglen site. All credit is due to that work force, which makes tremendous efforts to get to work. Another 10 miles of travel would be the last straw for many of them.

The work force estimates that as many as 30 disabled workers would definitely not be able to undergo that extra travel. The local newspaper, the Rutherglen Reformer, has highlighted just one case where the proposed move would mean that the disabled person would have to give up his job. With upwards of 30 disabled people effectively being made redundant, so much for the boast of Mr. Trevor Owen, the managing director of Remploy, in a presentation made to the all-party disablement group in 1986: We have never made a disabled person redundant. The Remploy press release on the Rutherglen factory said: In order to protect the jobs of the disabled workers at Rutherglen, the Board of Remploy has approved a substantial capital investment programme which will improve still further the employment facilities at the Clydebank Factory. That is arrant nonsense. Employment opportunities for disabled people are governed by the proximity of the factory and the workers concerned. Progressively fewer people from the present catchment area would be employed at Clydebank, leaving the area devoid of such opportunities.

At a meeting, I was told by a Remploy representative that every effort was made to find other sites in Rutherglen and Cambuslang. When I asked, in writing, for the details, none was forthcoming. Subsequently, a senior Remploy representative told a meeting of the work force that no attempts had been made to find an alternative site, that none would be made and that, even if Remploy were offered a free factory, it would be rejected. The decision was made to reduce operating costs and economics demanded that the move takes place.

Questions must be asked about the direction that Remploy has taken, especially over the past five years. Why does the company seem to have lost its way from the original philosophy of providing employment opportunities for disabled people in the locality? It is not good enough to say, as I understand that Remploy representatives have said, that other areas have no such provision. The answer is surely to level up, not down.

Questions must also be asked about Government policy which has been implemented by the Government's appointees to the management and board of Remploy. The National Audit Office report of 1986–87 states: In November 1983, Remploy were asked to produce a business plan for the 4-year period 1984–85 to 1987–88 with a target of reducing government subvention so that by 1986–87 it would not exceed the employment costs of the disabled workforce. Remploy's four year business plan submitted in March 1984 showed that the bulk of the trading deficit (about £4 million out of £5 million) was accounted for by 20 of its 94 factories and that it aimed to meet its financial objective by increasing its profitable business but without closing any workshops or making workers redundant. Remploy's plan in fact provided for an increase in the number of disabled employees to 9,460 by 1987–88, but at an additional cost to DE of £6·1 million (though this was dependent on inflation factors and wage increase assumptions allowed for in the plan) in the three years 1985–86 to 1987–88.In the rolled-forward plan covering 1986–87 to 1988–89. Remploy revised the performance predictions for 1986–87 and 1987–88, which had been put forward in the previous plan approved by DE, and requested additional funds above the Public Expenditure Survey provision for 1987–88 and 1988–89. DE did not approve additional funds and Remploy reduced the planned increase in staffing levels from 9,460 to 9,000 as a result. Although, therefore, DE/MSC do not seek to establish any direct control over the numbers employed by Remploy and in general Remploy management are left free to run their business as they think tit, DE's control of funding influences the numbers of disabled sheltered employment places available with Remploy. So much for Government protestations that Remploy is free to make its own decisions. That freedom is clearly restrained by Government financial decisions. The Government are responsible for putting a financial squeeze on Remploy, which is forcing the company to depart from its traditional role of providing employment for disabled people in various localities. A parliamentary answer from the Department of Employment shows quite clearly that the proportion of the cost of employing people with disabilities at Remploy was 100 per cent. in 1984–85, 100 per cent. in 1985–86, 94 per cent. in 1986–87, 87 per cent. in 1987–88, and 90 per cent. in 1988–89, and the remainder was provided by the company from its trading surplus.

The public expenditure White Paper, Cm. 607, of January 1989, states: The aim is to provide sheltered employment in the most suitable and cost-effective way. During 1987–88 Remploy increased its turnover by £13 million to £91 million. The previous year's deficit of £0·2 million moved to a trading surplus of £1·9 million. The company's business plan for 1988–89 aims for a surplus of £2·8 million. Remploy's report to employees of June 1989 contains a statement by Tony Withey, the chief executive: But we increased our sales by £9 million to £99·7 million and we increased the amount we paid towards our disabled wages—our `contribution'—from £7·5 million to over £8·5 million. A table in the annual report clearly shows that, from 1986 onwards, the Government's financial contribution to employing disabled workers has progressively fallen. I should not have thought that, in 1989, a case would have to be made for totally different criteria to be applied in the Remploy operation. Although in one year Remploy's excess of income over expenditure was £55 million, the estimate of net costs, after flow-back and savings to the Exchequer—I know that the Minister will understand the word "flow-back"—was just under £7·5 million. That is a relatively cheap cost for employing nearly 9,000 disabled people. Such costs have always been accepted as society's contribution to a vulnerable section of our society. I am confident that there is public support for paying those costs. In any case, the Rutherglen factory is profit-making.

The company seems to be using the excuse of the factory being declared unsafe to rationalise its costs to cope with Government restrictions. That is a dereliction of Remploy's duty as enshrined in the original Act of Parliament. The company was never intended to be treated as a wholly commercial enterprise, but it now seems that only commercial criteria are to be used.

As I understand it from the work force, Remploy has sold the factory in Rutherglen for £130,000. That means that the company is taking that money out of the Rutherglen area and it has had the nerve to tell me and local people that that will be for the good of the Rutherglen area work force. The company must know that many of those disabled people will he unable to travel further than they do at the moment.

Remploy has stated that a new factory would cost £0·75 million, but, as I have already said, the company has contributed a further £1 million from its trading surplus to the cost of employing its disabled workers. As I have shown, the effect of that is only to reduce the Government's share of those costs. I imagine that it is within the power of the Department of Employment to suggest to Remploy that a new factory should be built using that surplus. The Government would then meet the shortfall as they have in previous years.

In 1987–88 Remploy made a trading surplus for the first time. Therefore, let us be clear that Remploy could use its surplus to build a new factory or to reduce Government costs. Surely, for what is involved, it is not beyond the Government to suggest to Remploy that that £1 million would be better used to help the disabled than lying in the Government's bank account. In addition, the £130,000 from the sale of the factory could serve as a useful base for the £0·75 million cost of the factory.

That would enable the continued provision of employment opportunities for disabled people from a large catchment area. At the very least, it would mean that 30 people would avoid losing their jobs. It would also avoid long additional travel for the disabled people who might be forced to go to Clydebank. On the positive side, Remploy would retain a cohesive work force which has shown that it is profitable within the Rutherglen factory environment.

A trade union official has informed me that the Scottish Development Agency has made available to Remploy a factory of 10,000 sq ft at an annual rent of £22,000—in the Cambuslang investment park area. Although 10,000 sq ft was the wrong size, the rent is an indication of what can be made available from the Scottish Development Agency. I am sure that it will be able to come up with a suitable alternative site.

I appeal to Remploy and to the Government to find a new factory in the Rutherglen-Cambuslang area for those disabled pople, who have a hard enough life without losing a job which not only provides income but also proves that they can have independence. Their job means so much to them. I cannot believe that it is the deliberate intention of Remploy or the Government to cause so much hardship.

However, I have to accept that we live in a cynical world and that this could be a conscious decision by Remploy, backed by the Government. If that is the case and the factory is closed, as the local constituency Member of Parliament, I will neither forgive nor forget. I give the promise that, on the return of a Labour Government at the next general election, I will pursue with that Government the question of exactly what happens at the Rutherglen factory, who made the decisions and on what basis. Depending on the answers, I will then campaign for the appointment to the Remploy board and management of people who will operate the company on the original principles and philosophy of helping disabled people, not throwing them on the scrap heap.

The Minister can act. I call on him to do so and I advise him that he will be judged by his actions.

Photo of Mr John Lee Mr John Lee , Pendle 10:24 pm, 13th July 1989

I congratulate the hon. Member for Glasgow, Rutherglen (Mr. McAvoy) on his good fortune in securing an Adjournment debate on this important matter, which is understandably causing considerable concern in his constituency.

People with severe disabilities have a real contribution to make to the economic life of this country and for over 40 years Remploy has been playing a major role in making that possible. For people with severe disabilities, the chance of employment—whether in a Remploy factory, on a sheltered placement or in some other form of provision—means independence, self-esteem and social contact, and it represents an important step towards integration into the life of the community. For many it means the chance, perhaps for the first time, to be appreciated and rewarded for their abilities rather than judged on their disabilities.

The creation of Remploy under the Disabled Persons Employment Act 1944 stemmed from the belief that disabled people—even those with severe disabilitie—could, given the right support and opportunity, make a worth while contribution to the wealth of the nation.

Since it opened its first factory at Bridgend, south Wales, in April 1946, the company has expanded its commercial operations throughout Great Britain. In each of its 94 factories it seeks to provide employment in a normal commercial environment for people with severe disabilities of all ages and covering the widest possible range of disabilities. It is involved in many different businesses and trades, working to the highest standards for many of Britain's leading companies in such diverse areas as wood and metal furniture, surgical aids and appliances, clothing for leading high street store groups and other purchasers of quality goods, food processing, horticulture and an impressive range of packaging and assembly work. The company has always sought to adopt a flexible approach to the employment of people with disabilities, which has in recent times taken it into new manufacturing and service areas.

Since its formation in 1946, Remploy has steadily increased the number of jobs that it provides for disabled people, with the considerable financial support which my Department has made available. From a total of around 6,000 in the mid-1950s, the company is now providing jobs for around 9,000 people with severe disabilities. In addition, it also employs some 2,000 able-bodied workers.

In plans agreed with my Department, Remploy has, through sound commercial practice in recent years, increased its sales from £62·7 million in 1984–85 to £99·7 million last year—a 59 per cent. sales growth. As a result, the level of Government subsidy, expressed as a proportion of the company's disabled employment costs, has fallen, as the hon. Gentleman said, from 109 per cent. in 1984–85 to 93 per cent. in 1988–89. That is a considerable and commendable achievement, and the more so for being undertaken in quite difficult trading conditions.

Of the Government's total spending of £92·3 million on the sheltered employment programme in 1988–89, the contribution for Remploy amounted to £62·7 million. The programme itself is currently supporting jobs for some 19,500 people with severe disabilities, and is set to expand further this year with the continued growth in sheltered placements.

The substantial growth in sales to which I have referred has not been achieved by good management alone. Equally important has been the efforts made by the disabled labour force to help bring that about.

I am very happy to have this opportunity to congratulate all employees at Remploy on their efforts in recent years and to pay tribute to the flexibility and adaptability that they have shown.

Remploy is the major provider of jobs within the sheltered employment programme and operates as any other commercial undertaking in a fiercely competitive environment. It has a board of directors, appointed by my right hon. Friend the Secretary of State for Employment, with substantial commercial and industrial experience to manage its day-to-day affairs in a normal commercial way. However, in addition to its normal commercial responsibilities, the board has to ensure that its decision-making takes proper account of the best interests of the company's disabled work force.

To ensure that it can make the fullest contribution to providing employment for people with severe disabilities, it is important that the company should also continually seek to improve productive efficiency in its factory network and to find opportunities to reduce its costs. Its success in the application of its commercial skills in this and other ways is important to the employment prospects of its disabled work force as a whole. While the company continues to receive substantial financial support from Government in recognition of the fact that the output of the people with severe disabilities whom it employs is limited by their disabilities—it is right that that support should continue—the financial resource is not without limit. The company must at all times, therefore, use its commercial judgment in making decisions affecting its factory network.

The present network of 94 Remploy factories reflects essentially the needs and priorities of the past 40 years rather than the demands of the late 1980s. That is also true of the geographical spread of sheltered workshops run by local authorities and voluntary bodies. What we have overall is an unevenness in the distribution of employment provision for people with severe disabilities. Some areas have little or no provision; others have concentrations—often of competing provision of similar kinds. In taking decisions today affecting individual factories, Remploy has to take account of its inheritance of a framework of 94 factories and that will, of necessity, affect its freedom of action.

In a wider context, the distribution of sheltered employment provision is an issue which my Department has been addressing. Primarily through the creation of more cost-effective and socially progressive sheltered placements, we are seeking to produce a more equitable geographical distribution of resource, although this will take some time to achieve. The sheltered placement scheme, which allows people with severe disabilities to work alongside able-bodied colleagues in a wide variety of jobs and locations, has widened the employment choices for this client group and is currently supporting more than 5,000 jobs throughout the country.

As we look closely at what our sheltered employment programme has offered over the years, and can offer in the future, we need to draw on the best to provide the most appropriate support for as many individuals as possible within the resources that can be made available for all those with disabilities—whether severe or not—who require some assistance in finding and retaining employment. I know that the hon. Gentleman is genuinely and primarily concerned about developments in his constituency, but I hope that he will find these more general observations on the sheltered employment programme and the role played in it by Remploy helpful in putting into context the action that the company is planning to take in respect of its factory at Rutherglen, which is the subject of this debate.

I am sure that there is no dispute over the fact that it is necessary to close the Rutherglen factory on its present site because of the severe structural faults that have been evident for some time. I know that the company has considered fully all options available to it, including the possibility of building a replacement factory at Rutherglen, but on a different site.

The hon. Gentleman asked whether he can see the surveyor's report on the Rutherglen factory and other papers prepared for the Remploy board. As I have explained, Remploy operates as a normal commercial undertaking in its business operations, and the material that he has requested is regarded as commercial in confidence. It is for that reason that I cannot agree to ask the company to release the documents that he has requested. I am satisfied, however, that the company has acted properly in this matter in informing the work force of its decision and in seeking to do everything possible to protect the jobs of the disabled work force.

Clydebank is a modern Remploy factory, also in the textile sewing division, and it is large enough to accommodate the combined work force. The decision to transfer the disabled work force from Rutherglen to Clydebank will result in the better use of resources, increased efficiency and reduced costs and is, in the judgment of the Remploy board, the best way of protecting the jobs of the 83 people with severe disabilities currently employed there. To safeguard the jobs of those workers, the board has approved a capital investment programme to improve still further the facilities at the Clydebank factory. These are questions on which it is entirely proper for the board to reach decisions in the light of the information available to it. I am satisfied that the company has taken its decision with the longer-term interests of its disabled employees at Rutherglen uppermost in mind and with due regard to the commercial realities.

Nevertheless, I can well understand that those workers in Rutherglen who will need to travel the extra eight miles or so to the Clydebank factory each day would prefer a solution that did not involve this additional journey. For some of the physically disabled in particular, I appreciate that this may be more inconvenient and I regret very much any additional difficulties that this may pose. I have been very glad to hear, therefore, that the company will be doing everything possible to minimise the difficulties. Remploy has a good reputation for caring and its area personnel manager is in the process of seeing every employee individually to resolve any personal problems.

It is not always possible, of course, for employees to have their place of work right on their doorstep, and I understand from Remploy that on average the workers at their 94 factories throughout the country tend to travel some three to five miles to work, with some travelling as much as 10 miles. I acknowledge, however, that that will be of little consolation to those Rutherglen workers who will be faced with a longer and more difficult journey to work than perhaps they currently have.

I am pleased to hear that the company will provide special transport to Clydebank for those who need it, and will fully reimburse any additional travel costs incurred by disabled employees. If any employees in Rutherglen find it more convenient to move to one of the other nearby Remploy factories rather than Clydebank, the company will be prepared to consider this. By dealing with problems on an individual basis in this way, the company hopes to minimise the inconvenience to its disabled work force.

This is not, of course, the first occasion when Remploy has merged adjacent factories. Last year the company successfully merged three factories in Wales into a new factory to provide a more modern environment with improved working conditions. The majority of the workers involved came from a factory some nine miles from the new factory, and the company was able to carry out the merger without making any of the 75 severely disabled workers concerned redundant.

The company is seeking to take all necessary steps to safeguard the jobs of the disabled work force at Rutherglen and so provide continuity of employment for them.

I am sure that the hon. Member is also concerned about the future employment prospects of the 16 fit employees working at Rutherglen alongside their disabled colleagues. I hope that they, too, are successful in finding suitable alternative employment as soon as possible. The hon. Member will no doubt appreciate why the company must direct its efforts primarily to safeguarding the employment of those workers at Rutherglen with severe disabilities. The local staff from my Department will, of course, be pleased to assist the displaced workers in every way possible with any future employment or training needs that they might have.

I am grateful to the hon. Gentleman for raising this matter and for giving me the opportunity of setting out the background. Naturally I share his concern about any inconvenience which the proposals will cause. I hope, however, that he will be reassured by the caring and responsible way in which Remploy is dealing with the effects that the change will have on the individual disabled workers at Rutherglen, as it seeks to protect their continuity of employment. I hope that I have made it clear that the board reached its decision on the basis of the commercial and technical information available to it and in a way that is consistent with its responsibilities to ensure that it can support the maximum number of jobs for people with severe disabilities.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes to Eleven o'clock.