Remploy: To be fair and balanced

An email I have received from one of the Remploy workers/trade unionists:

Your article Remploy on strike

July 20th, 2012 · No Comments

Is one I wish to bitterly dispute.

I am a Remploy employee at Remploy Spennymoor in Co Durham and have worked there for the last 34 years. I am also a Union branch secretary for Remploy disabled employees and an elected member trustee on the Remploy pension scheme as well as being a national negotiating delegate for the Trade Union consortium. All of these roles mean I have regularly met with senior management and the board of directors as well as having access to financial information over the years.

So let me explain.

This is only an accusation thrown out by the minister who is only repeating what she is being advised is a suitable political argument to close Remploy.

The correct interpretation is this.

This cost is derived by dividing the subsidy provided to the Board of directors to run Remploy by the number of employees it employees.

I would put it to you that the way to manipulate these figures to arrive at a high cost which you mention as being 25,000 per disabled employee is this.#

Since overheads generally go up each year the cost of running factories like any other business also goes up. However if you reduce the number of workers in either the company or a factory the cost per person goes up accordingly.

Let me give you an example. Since 2008 we have had 2 rounds of voluntary redundancies which has slashed our workforce from over 5,000 to under 1500. In my own factory in 2008 50% of them went in 2008 under voluntary redundancy. (just 5 people have found a job since by the way )

Of course the cost per person has gone up. As I said in my factory the cost per person doubled because of this situation which is now used to beat us over the head with verbally by the minister Maria Miller.

But it does not mean that the actual cost to the taxpayer of employing a disabled person has gone up. This is a paper exercise weighted to manipulate cost per person.

(I myself know a number of factories who got their own costs down to a level approaching only £10,000 per person. Despite the government wanting factories to fail)

So how can this be?

By having a structure of over 500 managers including highly paid senor managers and directors which equates to 1 manager for every 3 people in a factory( plus expense accounts) which is also part of the subsidy given by the government. Meaning this 25,000 also includes their costs not just that of a disabled worker.

You also need to add this in also. Remploy created a central costs dept.

Basically what this meant a lot of money was being paid to them by ever factory. For example did you realise that to have a computer on site it cost the factory over £100 per week. Where can you get a computer, which are now ancient by the way, for £100 per week?

An email account costs £100.

If your factory had its workforce slashed and despite increasing productivity by 12% in 12 months you were to find yourself in a similar situation where jobs were turned away as being to costly and only low paying jobs were taken on, in addition tot these costs you would find yourself in the same situation as remploy factory workers.

We all feel utterly angry and bitterly insulted by this political argument to justify our closure. Disabled workers tend to earn just over £200 per week to take home. Its not even £14,000 per year. If we were given the opportunity to make money in the factories then the cost per person would soon go down and the profit could be used to employ more disabled people and invest in factories.

That does not happen because this government wants factories to fail. Because its an easy way of attacking the pubic sector.

Same argument is used to turn people against each other that private sector = good

public sector = bad.

Check it out where you can, when you can, but I would hope you remove that 25,000 bit.

Kenneth Stubbs

GMB TU Consortium Delegate for Remploy (North East)

The truth or not of any of this I have no idea. But good to have both sides, eh?

And if the above is true then there\’s certainly some of that old \”as we\’re subsidised we\’re horribly inefficient\” isn\’t there?

And finally: what possible justification is there for a £25,000 a year subsidy to produce £14,000 a year wages?

Finally finally, aren\’t the unions getting better at this online response stuff?

27 thoughts on “Remploy: To be fair and balanced”

  1. “And finally: what possible justification is there for a £25,000 a year subsidy to produce £14,000 a year wages?”

    His point is that the fixed costs are high, but they used to be less than £14,000/each when there were more people involved.

  2. Must say I’m confused about this.

    “If we were given the opportunity to make money in the factories then the cost per person would soon go down and the profit could be used to employ more disabled people and invest in factories.”

    Private companies don’t need to get permission to make money, or ask for opportunities. Perhaps this Remploy thing should be run as a private company if it would indeed be successful without government subsidy?

    Or am I missing the point? Perhaps it is difficult to get loans to set up manufacturing businesses in the UK, especially ones with a non-profit focus, in today’s economy so setting up a factory which requires a lot of capital investment might be a bit difficult.

  3. It certainly sounds as if there are substantial efficiency savings which could be made. Perhaps, there might be some scope for the redundant workers to use their redundancy cheques to buy out their factories and run them efficiently.

  4. Looking through this guy’s reply, he seems to have made a perfect case for shutting it down altogether. It’s stopped being a way of providing work opportunities for the disabled & turned into a scam benefiting those who are running it.
    Your £25,000 figure is entirely valid. Total cost of the enterprise/number of disabled employees. How else do you judge an enterprise apart from how well it’s acheiving its aims?

  5. Looking through this guy’s reply, he seems to have made a perfect case for shutting it down altogether. It’s stopped being a way of providing work opportunities for the disabled & turned into a scam benefiting those who are running it.
    Your £25,000 figure is entirely valid. Total cost of the enterprise/number of disabled employees. How else do you judge an enterprise apart from how well it’s achieving its aims?

  6. This reply makes Remploy sound like a typical public sector enterprise. Top heavy management and not looking to make a profit. I do have every symathy with the workers here. Perhaps a different way of subsidising. With the company changed to fully private sector. Perhaps as some kind of co-operative owned by the workforce

  7. The solution is to sack every single manager for gross misconduct, hence no redundancy pay, and get half-a-dozen of the workers to order the raw materials, ‘phone up the customers when the goods are ready for collection, send out the invoices and pay the bills. HMRC can send in a guy for a couple of hours at the end of each month to do the payroll.

  8. Did he send that during working hours?

    Where was that discussion the other day about people being paid to comment on blogs?

  9. But yes. While he has shown that it’s perhaps worth looking at subsidising disabled employment, he has added to the evidence that we should not do so by giving Remploy any money.

    Mind you, even in his best example, a £10,000 subsidy for a £14,000 job isn’t very good value.

  10. having seen the fairand balanced issue and seeing that in its self egenrated the comments I wish to expplain a couple fo comments.

    Firstly Remploy was set up in 1947 to cater for the caring society that labour were trying introduce such as the welfare state and NHS. Don’t forget about those injured in world war 2. When I first started in Remploy it was alongside an ex lancaster bomber pilot who could not bring himself to talk about his experiences which had left him with a limb missing.

    This is the sort of thing Remploy started out as. People will likely fall into 3 catergories. You either care about helping other less fortunate people, or you don’t, or you dont understand about it at all.

    What i was trying to explain is how the costs of supporting disable dbeing are being grossly manipulated by Senior Government figures to justify closing factories which has also been manipulated since 1997.

    Why say 1997.Because the company accounts then produced the following. Subsidy from the taxpayer was £97 million. number of disabled people employeed in factories 10,000, Employed outside remploy another 1,000. Number of factories in Remploy 97. But the sales in 12 months were £247 million alone. Which left a very health profit. But none of this went back into Remploy which most businesses would do in order to flourish.

    The need to employ disabeld people who cannot fit into the support mechanism Remploy provided for each of its workers has not gone away it has increased.

    Speaking here as a trade union rep, yes saving can be made most certainly.

    We have put already put 5 seperate business plans to the Government which have been totally ignored. Despite the minsiter standing up in a televised debate in the house of commons and saying to those Mp’s that she would listen to it.

    And yes it would include dismantling those costly managment structures.

    The cost of Remploy factories could be redunced to just under £30 million. Comapered with a possible benefit bill of over a calculated £38 million once these workers are unemployed.

    Compared to supporting banks and bankers bonuses the cost of Remploy is very small change.

    kenneth stubbs

    I would also like to add that all remploy workers also are taxpayers and they do not take kindly to accusations they are a burden on the taxpayer. They just want to contribute to society rather than languish at home on benefits.

    So i would like to point out that comments along the lines of it is inneficient and costly is because it is a government owned organisation.

    Therefore the ultimate responsibility for making it efficient rest with them – which they are ignoring.

    Its not like a private company, its the government that sets the subsidy and targets and appoints the chief executive and chairman and senior executives and the political parameters on what we can do or not do.

    we’re just the pawns on the shopfloor

    So it comes back to the basic question. Either you care about the role and the independence to be a part of society rather than an outcast or you don’t

    kenneth stubbs

  11. “People will likely fall into 3 catergories. You either care about helping other less fortunate people, or you don’t, or you dont understand about it at all.”

    I think it’s safe to say, No.2 for most on here..

  12. Is the reason for remploy being set up still applicable today?
    The world has changed. Its now possible for some disabled to set up in business for themselves – the internet is a wonderful tool. Is there still the same need for a state supported organisation in this way? Or could the state support in a different way?

  13. But it does not mean that the actual cost to the taxpayer of employing a disabled person has gone up. This is a paper exercise weighted to manipulate cost per person.

    Yes, it does. Same as if you buy a bottle of wine in a shop you pay for the bottle it comes in, the cost to ship it to the shop and the heating and lighting of the shop that it’s sold in.

    We might say that the disabled person isn’t seeing any of that £25K. That would be accurate. But it is still costing the taxpayer.

    And if you’ve got PCs rented at £100/wk and a 1/3 management ratio for a factory, then no, it really isn’t a very good advertisement for the public sector.

  14. Seth @ 11
    “I think it’s safe to say, No.2 for most on here..”

    No Seth. Think you’ll find most “..care about helping other less fortunate people” Except people like yourself of course.

    If Mr Stubbs is to believed, the organisation is spending a great deal of taxpayers’ money with very poor results. Most of us would prefer it to be spent more wisely in achieving the same, or more likely, vastly better results. Except you, of course who, favours the continued looting.

  15. Kenneth,

    I’m not sure if you were referring to me about privately owned or not, but if you were let me try and clarify what I was tring to say.

    If what you say in your original and follow up comments are correct, then I stand by my assertion that Remploy would be better off as a private company. The management (and I include the government in this) seem to be running the company extremely badly. They are overpaying for equipment (100 quid PC’s) and for the management team.

    If the company previously turned in a healthy profit and in your opinion still could if ut was managed better, then that is surely the route to take.

    If subsidies are still required, they could take the form of something like the cost of converting machinery for use by employees. That would put you on a level playing field with your competitors without sacrificing profit margins, but would also stop managment creaming off more perks for themselves.

    Being a private company without government restricting what the company does the company could also diversify from manufacturing. Tender for call centre work perhaps, which would allow more disabled people who would be unsuited to even adapted factory work to have a job.

    As usual it is the government and cronyism that seems to stand in your way. I for one do care that people with no other options are looked after and helped, especially ones that are doing their damndest to help themselves. That help doesn’t have to come from the state of course, but at the moment that is what you are stuck with.

  16. PCs at £100 a week – I dare say even a tiny company can get a much better deal on leasing through pretty much any large scale PC supplier. This laptop I’m using was £300 to buy – brand new. If I’d had gone for a lease I could probably have got one (small company with 3 employees) for around £6 a week or less.

  17. Seth

    “I think it’s safe to say, No.2 for most on here..”

    It might be ‘safe’, but it’s also wrong. Disabled people should be helped to work. The fact you think the readers here don’t want that reflects badly on you, not them.

    You fall for the classic logical fallacy:

    1. Something must be done.
    2. This is something.
    3. We should do this.

    Example 1:
    1. I need a bottle of wine.
    2. This bottle costs £2000.
    3. I should buy this bottle.

    Example 2:
    1. Disabled people should be helped to work.
    2. Remploy does this (badly and expensively).
    3. Remploy is the way we should help disabled people back to work.

    You assume criticism of Remploy is criticism of the concept of getting disabled people back to work.

    You assume Remploy is the best way to accomplish this, even when Mr Stubbs inadvertently shows it isn’t up to the task.

  18. Removing the Remploy Enterprise Businesses (the other part of Remploy is the high street employment service – which gets a fairly decent return) subsidy was proposed in the Sayce Review – conducted by a head of a disability charity.

    They proposed that rather than helping a few thousand disabled people into “ghetto” jobs, the funding would be far better put to use to support Access to Work where it could benefit up to 40,000 disabled people.

    Remploy’s Enterprise Businesses are not limited to factories – they also include provision of CCTV control rooms and other modern jobs. It is being proposed that the businesses with a decent future be privatised.

    The problem with the other businesses is that there often isn’t enough work to go around (mentioned in the Sayce review) so some staff have nothing to do. That just belittles them.

    The other issue, of course, is that Remploy’s subsidy allows them to undercut other small businesses.

  19. @ Seth
    How much time and money do you personally expend to help less fortunate people? If it’s less than 10%, then back down and apologise.

  20. Building on what Stuck-Record said, Seth, you fall into the old socialist trap of “They don’t want the government to provide this product or service, therefore they do not what they product or service provided”

    Far from it, I do not want, for example, the government to provide cereals, or YouTube videos. However that does not mean that I do not want either cereal or YouTube, just that I think that the private sector is more capable at providing those goods and services. Indeed I could not think of anything worse than a government ran and mandated YouTube.

  21. @ Kenneth Stubbs
    Your criticism of Remploy’s management is justified but to blame the present government for the cuts in 2008 is pushing your Labour party line out into the Asteroid Belt. Also you got the origins wrong – it was not Attlee’s “caring” Labour government: Remploy was set up in April 1945 by the National Government to provide the injured (mostly war injuries) and disabled (excluding the Blind who had workshops set up by RNIB) with the dignity of being able to *earn* a living and (I believe – it was the impression that my parents gave me) most people would choose to buy the products of the local Remploy factory when they needed an item in the range of goods manufactured there. This worked for a long time until a combination of a generation that could not remember the War, cut-price imports from Asia, and bad management that failed to refocus on goods that were in demand and for the manufacture of which their employees’ disabilities provided a smaller handicap, has led to a situation where sales revenue declined.
    Every single member of the Board of Remploy was appointed by the Labour Government. They complain that low-price competition means that half the employees have little or no work to do most days of the week – sapping their self-respect – instead of cutting their prices to match the competition (this would reduce losses unless the foreigners are “dumping” goods at below average cost). [Yes, I can see that cost of materials plus operating costs exceeds sales revenue but if you strip out the “employment services” which made losses of £39m on revenue of £26m – i.e. costs were 250% of revenue – then factory revenue is positive before wage costs]
    It is obvious that Remploy should drop their jobsearch side, cut management and plough all their subsidy into the difference between a living wage and the “economic value added” by the workers but new Labour’s appointees are doing the opposite.
    A company that refurbishes computers should not be hiring computers at £100 per week.
    So go along to the next Labour Party Conference and tell them why Remploy is choosing to make disabled people redundant.

  22. I suspect that privatising Remploy would be fraught with State Aid problems. I am working on a Government project (I am not a civil servant) that is using State Aid to fix a market failure and its an absolute minefield. And yes rules around State Aid are a good idea because we don’t want it undermining profitable businesses where the market hasn’t failed. In theory its also a good way of controlling socialist Governments, but as we have seen the rest of the EU seems to ignore them, but that’s another story.

    Anyway, what Craig said. Industry and the tax payer has spent millions trying to make life easier for the disabled under various equality legislation (I’m sure there’s still a long way to go) so that they can get in to offices and other buildings easily. It must be better for them, and the rest of us, if the disabled can be integrated, and if support is needed let the Government pay for specific cases through grants rather than rather than shove the disabled in to a ghetto and have money showered on them so that lefties can feel good about themselves.

    @Seth. I’ve been reading this blog for about 5 years and from what I have read I can assure you that the vast majority of readers would support the aims of Remploy as being very laudable. The difference is that when something doesn’t work we want to find a better solution, not continue throwing good money after bad.

  23. What’s the difference between a subsidy to Remploy and benefits to the disabled to provide for their cost of living? Only that in the former they have something productive to do rather than be encouraged to sit at home.

    But what if the benefits went to the company that employed a disabled person. Each company could hire the person who is suited to the job. Not privitising but using private companies to provide the service and not the state. So the state can’t get it’s sticky fingers involved in providing jobs in Remploy management to it’s cronies.

  24. SimonF – I agree with you on this. A minor bit of help to level the playing field is one thing, giving us something jobs because we are disabled is disheartening. Getting a job because you are the best candidate is what many of us want. Often doesn’t happen – government say that ethnic origin, disability, sex etc should be ignored then require information to be collected on it regularly. So not uncommon for companies to have a token crip or two, nothing thats going to badly impact the business. My previous job I was both the token crip and for two years the token male… 🙂
    Seriously – having used support services for getting back into work back in 2006, I have to wonder if the remploy money couldn’t better be used as has already been suggested, to provide support for disabled to get into mainstream employment (or self employment/company creation etc).

  25. We’re talking about people who want to work losing their jobs through no fault of their own. I share some of the reservations expressed here about what Remploy is doing, but I don’t find this an easy decision.

    kenneth stubbs: What you say about Remploy suggests that its problem is poor management, and too much of it. The popular view here is that this is inevitable in subsidized, state-run enterprises. It’s not that private-sector management is automatically better, but the Darwinian effect of dysfunctional businesses closing down.

    Subsidy from the taxpayer was £97 million. number of disabled people employeed in factories 10,000, Employed outside remploy another 1,000. Number of factories in Remploy 97. But the sales in 12 months were £247 million alone. Which left a very health profit.

    I don’t understand what you’re saying there. “Subsidy” and “profit” are opposites.

    If we want more disabled people to have jobs, the natural thing to do is to make it cheaper to employ them. How about abolishing employers’ national insurance contributions for disabled employees? (I don’t know how to define ‘disabled’, but Remploy must have a definition, we could work from that.)

  26. PaulB, yes, I was puzzled by that “healthy profit” claim as well.

    Yes, sales were £247 million, but what was the cost of sales? What were the overheads? What was the wage bill?

    Yes, there might still have to be a subsidy, which could perhaps be compared to benefits saved and even intangibles such as giving disabled people a chance. But merely saying that there were lots of sales doesn’t help us.

  27. I was expecting the Board to look better; a worthy organisation with plenty of government funding ought to be able to attract more high-powered retired bods:
    http://www.remploy.co.uk/about-us/corporategovernance/board.ashx

    Chairman is an accountant, ex FD of Scottish Power (accountants rarely make good chairmen; Scouttish Power isn’t exactly a paragon of governance).

    Chief Exec is ex Highways Agency and Guy’s Hospital, neither of which has a great reputation for being well managed.

    FD from companies I’ve not heard of, other than his initial Big-6 accounting training.

    Co Sec is ex-Mowlem; OK, but not top of the tree.

    Non-exec 1 is ex HR man at Rothmans; won’t find me complaining about that.

    Non-exec 2 is a Labour Party, TUC lobbyist & disability rights campaigner.

    Non-exec 3 is a “freelance Diversity Consultant”. Background in disabled lobbying.
    Also Governor of Motability, which from memory was similar to what we hear about Remploy – run for the benefit of the management rather than the disabled, which should have been enough to disqualify her.

    Non-exec 4 is an IT man, with a rather 3rd-rate looking CV and some quango experience.

    Non-exec 5 is anouther accountant, previously chief exec of a recruitment agency.

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