Gimme shelter!

Do the economics of sheltered work for people with disabilities add up? Remploy's recent urgent restructuring raises profound questions about whether this is something the workplace can afford to offer. E&T seeks an answer.

There's nothing strange about a manufacturer launching a sales campaign in eastern Europe. But one announcement last September broke the mould.

First, this manufacturer makes chemical, biological, radiological or nuclear (CBRN) protection suits, life jackets and military textiles for the emergency services and the military. For 'new Nato' countries in the former Soviet bloc to take military equipment, including body armour, from 'old Nato' suppliers is unusual, says the company, but its leading-edge products and technology give it a fighting chance of success.

Second, few think of the company making this declaration as a voracious, internationally competitive pioneer. It's Frontline, an offshoot of Remploy which, with 3,000-plus workers on 54 sites, is the UK's largest employer of people with disabilities.

Remploy insiders are weary of trying to counter their image as wheelchair-bound basket weavers. They point to 10 divisions which include a tier-one supplier to Honda, BMW, Jaguar, Lotus, Aston Martin, Land Rover, Volvo and JCB. The furniture offshoot makes one in three school desks, supplies halls of residence, and has won a contract to furnish over 700 rooms at Carillon's Salford Quays development in Manchester, UK. The air filters it makes in Barrow-in-Furness, Cumbria, supply nuclear power stations and operating theatres.

But Remploy is swinging hard from manufacturing to services, concentrating particularly on the Employment Services unit charged with finding mainstream jobs for disabled clients. In present conditions, Remploy's industrial customers have cause to wonder how long Remploy can survive.

Five years ago Remploy employed almost 6,000 people in 83 factories. The modernisation plan now in place cut management by a quarter and retained the 54 sites for a government subsidy of £111m a year. But it also called for income from public sector contracts to rise 130 per cent to £461m over five years.

It's not hard to see the problem. The government puts the break-even cost of keeping a disabled person in work rather than on state benefits at £10,400. Remploy says the current average annual loss per factory employee is £23,000.

Three years ago then-disability minister Anne McGuire complained vociferously that Remploy's 9,000 workers soaked up one-third of her £300m budget for the UK's nine million disabled. "Some jobs in Remploy's toiletries division are subsidised to the tune of £48,000 a year," she said.

By comparison, the one-off cost of finding a disabled person work in mainstream employment was £3,500. McGuire told E&T: "Had we not taken action to modernise Remploy when we did, Remploy was unsustainable - providing fewer and fewer jobs for disabled people for an ever-increasing subsidy that was at least four times in excess of any other subsidy to support disabled people in supported employment."

Short-term placements

But this claim, which relies on what campaigners perceive as faulty management arithmetic, is "not comparing like with like", says Remploy national union convenor Les Woodward: "I've been at Remploy Swansea for 25 years, but some of these [Employment Service] placements only last a couple of months. Fewer than half of the people are in the same job after five years. Some could be double-, triple- or quadruple-counted."

Ofsted, the government agency that regulates Remploy, confirms that, in 2006/07, the proportion of participants sustaining their open employment for at least 12 months was below 10 per cent, although Ofsted says this rose to 60 per cent in 2007/08.

Remploy campaigners offer other examples of what they claim is management incompetence. They point to red faces over the opening by Princess Anne of a £10.5m showpiece toiletries factory in St Helens. It closed three years later. "They just pulled the plug on it," says Remploy's GMB national senior shop steward Tony Gledhill. It was "losing money hand over fist", because of material costs, says Woodward, adding that the Aintree factory closed to make way for St Helens was one of the few making money.

Remploy's trade unions still say management never explained how they decided which factories closed, though some weeks ago the GMB and Unite unions withdrew a joint application to an employment tribunal for a protective award of £11m for failure to consult. The case was due to be heard in March. Remploy told E&T the case was "doomed to failure". The criteria for the plants' closure concerned more than volumes or profitability. It also concerned prospects for future market share. Some union officials had misgivings about pursuing the case; if they won, Remploy would have to find the money from already meagre resources.

But money isn't the only issue. Mark Priestley of Leeds University's Centre for Disability Studies shares Woodward's view that management and government will eventually close the factories. But that isn't a financial decision, Priestley insists, and he doesn't see the hidden hand of the UK Treasury behind recent changes in public policy. "I don't think that there's any robust economic cost-benefit evidence about sheltered employment."

Priestley says there has been an international move over the last 60 years from responding to disability by compensation towards treating it as a matter of human rights.

Charity, medical and social models

Liz Nightingale of the Employers' Forum on Disability (EFD) explains that many still think of Remploy from a 'charity model' view of disability, that the disabled should be grateful for unpaid or low-paid sheltered work, "because it's all they are capable of. But many disabled are capable of much more," she says.

The 'medical model' is that disability is just a condition to be treated. The EFD, she says, prefers the 'social model': "You're not the one who has the problem," says Nightingale,"it's society that has to change to allow you to reach your full potential." But for it to work, Nightingale adds, the arrangements have to meet the needs of both employer and employee.

"The ethos is right," says Gledhill, "and ethically that's what we'd want. But the employers are 20 years away from it. If you mention disability on your CV the door shuts on you."

Mainstream workplaces are becoming more welcoming. The UK's 1995 Disability Discrimination Act (DDA) has had some effect. The corporate social responsibility (CSR) movement means shareholders want to see companies being more socially useful. There are now positive role models: Stephen Hawking, former audit commission chairman James Strachan, who was profoundly deaf, the BBC's security correspondent Frank Gardner and others. And voice-recognition software, high-powered digital hearing aids, adapted computer keyboards, video telephony for the deaf and Braille terminals have all helped to bring the disabled into the working world.

Grants are available for all this, says disability consultant Stephen Duckworth, who contributed to one review of Remploy: "The funds are there and it's sad that not more employers know about it."

As it is, with unemployment rocketing for the whole UK workforce, the disabled seeking mainstream work face an even greater task. Contributors to disability chat rooms note that longer-standing anti-discrimination laws than the DDA haven't eliminated racial or gender discrimination. The disabled won't have been reassured by the UK recent refusal to ratify a UN disability convention obliging states to root out discrimination, fight negative stereotypes, guarantee freedom from abuse and promote equal rights.

Recruitment adviser John Warburton acknowledges the obstacles. But Warburton, formerly a JobCentre Plus account manager now on secondment to the EFD, says Remploy can give employers support.

BT's people and policy manager Helen Chipchase says BT has been using Remploy since 2003 on the 'able to work' campaign. One 'able to work' candidate had been out of work with visiual impairment for over 18 years. "I don't think that, just by doing the same thing that you would do with someone who had come out of work last Tuesday, you will get that person to a point where they give you everything that they have got." Remploy helped BT make this person suitable for employment by the time they arrived.

As for the factories, Gledhill says he is committed to the £10,400 per head target and is working more closely with management to achieve it. But he's concerned that, as age and natural attrition reduce the Remploy workforce and the orders dry up because of the recession, there will be nothing for disabled people to go back to when the downturn ends.

Even before the recession, the factories had been hit by the UK economy's drift to offshoring and the import of cheap goods from the Far East. Leeds used to recycle white goods, says Gledhill, who works there, but the cost of new washing machines dropped below that of the two raw machines needed to make a refurbished one. Now Leeds makes jam and biscuits for Dart Valley Foods.

The public procurement sales have not materialised, despite a 2004 European Union public procurement directive allowing contracts to be set aside for 'supported factories'. Remploy would not be interviewed. But it noted in a statement to E&T that the modernisation programme demanded a rise in public procurement sales from £40m to £140m a year and of the need for "urgent support" from local and national government to help win new business: "Despite efforts by the local management and the sales team we have not been able to secure the large quantities of public sector procurement required to sustain the factories. So we are also trying to focus on the private sector, which is difficult in the midst of a recession."

Remploy's Poole site was reprieved because of the potential increases in business the EU directive would stimulate, only to find its main product, a marine lifejacket, transferred to Glasgow with the machinery to make it. The factory once supported 43 workers, says Poole MP Annette Brooke. Now it has 19, "sitting around with little or nothing to do".

"At least three months were wasted pursuing public procurement," says Brooke, "a wild goose chase."

In that light, the Frontline sales push into eastern Europe looks more like desperation than a well-planned initiative with any hope of success. But Gledhill remains optimistic. He welcomes the reduction of the Remploy board and its remuneration from 17 members to four. And he welcomes the approach of the new chief executive, Tim Matthews, who told him, "My job is not to shut half of Remploy down. It's not to make Remploy twice the size it is. It's to make sure that whatever service we offer is for the disabled people and they can access what they want."

Gledhill says Shaw told him the government would not shut Remploy if it was going in the right direction and got its costs under control. He adds that he and Matthews agree that, if the needs and aspirations of disabled people can be met at the right cost, "then that's what we'll do."

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