Examination of Witnesses (Questions 1-30)
Chair: May I begin by
welcoming you all here this morning? Before we get started, I
have a declaration to make: I am a GMB member and I have received
money from the GMB towards my election campaign. Kate?
Kate Green: Similarly,
I am a member of the GMB and I am a member of Unite, and I have
received money from the union as well.
Chair: We have to make
that clear. The other thing, obviously, is that the union and
Remploy have been and continue to be in an industrial dispute,
perhaps not quite in any kind of formal way, and we are very conscious
of that. That is not the role of this Committee this morning,
because we are not here to adjudicate on any industrial dispute.
That is a matter between management and the unions. But what
we are concerned about is the future of Remploy as an organisation,
and particularly the future of the factory arm of Remploy. Our
questions will reflect that this morning. Oliver Heald has the
Q1 Mr Heald: Good
morning. Do you agree that history is working against the traditional
model for Remploy, in that there is not enough work for the factories,
and far more people with disabilities want to work in mainstream
Phil Davies: If
I can answer that, the situation in the UK economy is changing
considerably. We recognise that as trade unions but, having said
that, if you take for example a British furnituremanufacturing
industry employing over 100,000 people, it is more difficult now
to go out and get work. The whole situation has changed because
of the imports that are coming into the country; it is more competitive.
One of the reasons why we have asked Kathleen to
come along from our Brussels office is to talk about public procurement.
I think that question hinges on where the work comes from, and
whether Remploy has the organisation to go out and get that work.
There was an absolute commitment in 2008 that public procurement
would be one of the major planks of the new Remploy. If I could
just ask Kathleen to briefly tell you about where we see the sales
coming from to fill the factories.
Kathleen Walker Shaw:
Thank you. Just to be clear
Chair: I was just going
to say that we have got quite a lot of questions on the whole
procurement basis so, unless you want to make a very brief opening
remark, we will explore that in more detail, because obviously
it is a key issue.
Q2 Mr Heald: Really
I am supposed to be dealing with a slightly different set of issues,
which are about what disabled people can get out of the workplace
these days, and whether Remploy is providing a full day of fulfilling
work for the people who go there.
Phil Davies: The
answer to that is very clear. We have surveyed, and I think we
have provided the evidence of that, the disabled workers who lost
their jobs in 2008. Quite clearly, lots of those people, a very
high percentage, have said to us they made a mistake; they would
rather be in Remploy. There is an argument in the disability
movement about disabled people working together. There is nothing
wrong, in our view, with disabled people working together, as
long as that work is meaningful and as long as it is in the community
and it becomes part of the community. There is still a need for
some disabled people to need full support; people with severe
learning difficulties and mental health problems maybe need more
support than other people with disabilities.
Q3 Mr Heald: Do
you think it would be fair to say that the unions are acting as
a bit of a brake on change, because if you look at what is said
by the disability organisations, what was said in 2007 was that
far more people wanted to go into mainstream employment and that,
even with these very strong targets that were put forward for
more work, Remploy would be a smaller business focusing on employment
services, getting people into work and then some factories, of
course, continuing as promised. The union attitude just seems
to be to attack the employment service the whole time, as though
it is uneconomic and does not workwhen for many people
that is seen as the futureand then at the same time to
try to keep the numbers up in factories that are just completely
without work. Only half of the week is covered with work in some
of these factories. Is that right?
Phil Davies: I
think that might be the perception of some people, but the fact
of the matter is that the trade unions recognise a need for change;
we recognise a need that some people can go straight into open
employment with very little support, but others cannot. On employment
services, we recognise that the job that they do is very difficult.
We are not saying it should be the factories or employment services;
we are saying it should be both. One of the disappointing aspects
of Remploy has been that they have not used the factories to their
full capacities. We have factories now where there are 10, 15
or 20 people in them. They used to have 100 people. Now, what
do you do with the rest of the factory?
Q4 Mr Heald: And
there is not enough work for those in many cases. Do you agree?
There is not enough work even for the 15 who remain, in many
Phil Davies: There
Mr Heald: There is not
at the moment.
Phil Davies: That
is another issue. It is what sorts of targets you set your salespeople
and what type of salespeople you have.
Remploy's sales are suffering, like everybody in the country.
At the moment it is an abnormal situation. However, Remploy
management, even as late as yesterday, told us they have salespeople
who are totally underperforming; if they had had a free hand,
they would have allowed them to go on the [Voluntary Redundancy]
VR exercise. They are trying to recruit sales staff, and have
been now for a significant period, and they are being blocked
by the DWP in recruiting salespeople. Now, you cannot run a manufacturing
business unless you have salespeople bringing the orders inand
good salespeople, at that. It does start to make you wonder whether
there are not people in the background who want to see Remploy
Q5 Mr Heald: You
are saying that the quality of the sales force is just not there.
In some areas, and that is what the management told us, yesterday
even. Some sales staff are achieving 25%, 30% targets, which
is woefully inadequate but, as they cannot recruit and if they
let them go they are not allowed to replace them, they are better
off having a salesperson bringing in a very poor amount of work
than somebody not bringing in anything. The DWP has also capped
the sales staff's legitimate bonuses on achieving sales targets,
which has again disenfranchised those salespeople, because you
have taken away the incentive to actually get out there and sell.
Salespeople rely on hitting targets to achieve bonuses.
Q6 Mr Heald: This
is to do with my colleagues' areas of questioning. The point
that I am really working on is whether a lot of the disabled people
are getting a good day's work in the factories that is fulfilling
for them. My other point is: would a lot of the people who work
there prefer to be in mainstream employment? In November 2007,
Peter Hain did say that an increasing number of disabled people
want to be supported to work for mainstream employers.
Les Woodward: Can
I come in on that? My name is Les Woodward, and I am the national
convenor and also a shop steward in a Swansea factory. Like every
other factory, we see trainees coming in. A lot of the trainees
that we have got in the Swansea factory would quite honestly give
their right arms to have a job in the factory, and they are disabled
people. Coming back to your point about whether the factories
are relevant for the 21st century, that tells me that they are.
What they get from coming into our factories is they learn skills;
they see at the end of the day a product that they are rightly
proud of, and a product that in many respects is a world beater.
To me that ticks all the boxes of whether or not disabled people
want to work in a Remploy factory.
Q7 Mr Heald: You
can say definitely your resistance to disabled people moving into
mainstream employment is not about maintaining union numbers or
anything like that.
Les Woodward: We
have not got any resistance to people wanting to move into mainstream
Phil Davies: None
Les Woodward: There
is no resistance there. What we want is for Remploy factories
to be there in the future to give future disabled people the chances
that we have had to learn skills and to be economically active
within the community.
Kathleen Walker Shaw:
Could I just add to that very briefly to give you, in a sentence,
what the whole GMB and joint union campaign has been about, in
terms of the strong future that we wanted to see for Remploy?
It is the whole principle of the right of disabled people to
choose what form of employment. Everybody in this room has had
the choice of what career path they take. People with disabilities
are several rungs down the ladder of being able to make those
choices of their own volitionfollow their own aspirations
The aspiration of some people is to work in open
employment. For some of those people who want to do that, Remploy
has often been a very valuable period of work experience, development
and skills. We have to remember where Remploy came from. Remploy
is not a commercial enterprise; it is fulfilling a social objective.
We see Remploy and other supported employment factories as very
vitalincreasingly vitalbecause without supported
employment you will not be able to offer the freedom of choice
to disabled people. That is discriminatory.
Q8 Mr Heald: Just
to put a slightly different point to you, if I may, just to see
how you would respond, at one time it was Remploy or nothing.
Now a lot of us glory in the fact that people with disabilities
can go out and work in the open employment market. It would be
a pity if we were holding them back.
Kathleen Walker Shaw:
The two, as Phil says, are not mutually exclusive; they are part
of a package of options. We have to accept the reality that,
even with the workers that we have in Remploy and the workers
that we have in open employment with disabilities, they are just
the surface numbers. The amount of people with disabilities who
are still not in the world of work is absolutely unacceptable,
to be honest.
For those who are currently outside of the world
of work, working in open employment, regrettablybecause
the culture has not changed with the modernisation of political
policy development on disability down at the grassroots levela
lot of people with more severe disabilities are not going to walk
into open employment jobs anyway, even if we have a more buoyant
economy. In the current crisis, we are looking at 20.8% youth
unemployment at the moment.
Q9 Stephen Lloyd:
The Remploy issue has been going on for many, many years. Looking
at it from a social model, would you accept that the majority
of people in the disability lobby, although they appreciate and
accept that Remploy, because of its historical reasons, should
be supported and there is a need for it, actually are not very
keen on Remploy and the factory model? What they are really keen
onwhich, to be fair to the previous Government, they invested
a lot in with Access to Workis to get more and more disabled
people out into the mainstream workplace. That is the driver.
Are you suggesting that Remploy, as almost like a
protective home aspect for disabled people, should still be around
in 100 years? Are you hopeful that, as time goes on, more and
more disabled people with the right support are able to get into
mainstream work so that mainstream society can benefit? Do you
think that is a good thing or are you hoping to see Remploy still
employing loads of people in factories in 100 years' time?
Kathleen Walker Shaw:
The reality is that we have to accept that we cannot talk about
people with disabilities as a group that we can identify. The
range of disabilities, and the peaks and troughs of the severity
of those disabilities, is an ongoing thing. You cannot, at any
one day, categorise that. That is why the importance of choice
is such a key feature of this argument. In our view, the reality
is that a lot of people are going to need support in their employment
to be actively involved in the world of work. The sad reality
is that commercially open jobs do not allow for the mentoring,
support and possibly the lack of productivity that sometimes comes
when a person with disabilities is suffering.
Q10 Stephen Lloyd:
Would you accept that that has changed a lot in the last 10 years?
I paid tribute to the previous Government, and I mean it; I am
not being sarky. I think they have made a lot of effort and a
lot of progress with people with disabilities in supporting people
with disabilities into work. My view is, personallyI am
sure you guys disagree, but I know what I am talking about herethat
the Coalition Government is actually following that train of thought
even more with the Work Programme, and investing potentially thousands
of pounds into the training group providers to get off their backsides
and help support disabled people into work. In my view, and I
would be interested in whether or not you agree, all of you, is
that the direction of travel is for more and more disabled people,
with their tremendous range of skillsas all people have
a tremendous range of skillsgetting the right level of
support so that they can get into mainstream employment.
The older model, which was necessary x number
of years ago, of Remploy and factories and bundling them all together,
is inescapably going to be going in a downward trend, because
progress is getting people with disabilities into mainstream employment.
Would you say, "No, that is not true. We want to stick
with the Remploy model and expand the factories for ever and ever"?
Phil Davies: It
is halfway true. In 100 years' time, we may still have disabled
people who cannot get jobs because employers will not take them
on. That is a fact of life.
Q11 Stephen Lloyd:
You cannot guarantee that. That is a subjective statement. In
100 years' time, there will be some employers who, because
they are idiots, will not employ women. There will be some employers
who, because they are fools, will not employ Welsh people. That
is a ludicrously subjective statement, if you do not mind my saying
so. Believe you me, I have worked closely in that area and I
know it well. There is still a long way to go, and I will fight
ferociously for the rights of disabled people as long as I am
an MP. But the difference today, compared with 15 years agomostly
under the legislation brought in by John Major and then powered
firmly by the previous Labour Government, legislation that I supportin
the number of disabled people finally getting into work, because
employers' doors were then being battered down, is in a completely
different league from what it was 15 years ago. To say in
100 years' time that there are still going to be some employers
not employing disabled people
Phil Davies: I
had not finished what I was going to say. In 100 years' time,
it may well be a lot better, but there will still be employers
who will not take on disabled people.
Stephen Lloyd: I agree.
Do you take my point then
Chair: Allow Mr Davies
to answer the question that you have put, and then you can come
Phil Davies: I
will be very brief, if I can just finish. The proof and the only
survey, as far as we know, of disabled people leaving supported
employment, was done by the GMB and Unite. That survey showed
that the biggest part of those disabled people is still unemployednot
because they have not tried, I have to say, but because they have
tried and been turned down. Now, you are completely right; it
is changing, and it is far easier than it was 20 years ago, but
there are a millionplus disabled people still not in employment.
We are not going to wave a magic wand without giving the support
mechanisms to those people to find work.
Now, why take away a place of excellence, which people
can use as a halfway house? That is why I said there would be
changes. It may well be that you come into a Remploy factory
and you stay for a limited period, because some disabled people
have never worked, and they are 40 or 30 years of age. They do
not know what it is to have to get out of bed in the morning and
have to turn up at a certain time. What we are saying quite clearly
is of course there will be change. We hope that employers will
employ more disabled people and there will be opportunities in
the open market for disabled people.
The fact of life is that, while we sit here, there
are tens of thousands of disabled people who are unemployed.
Only 26% of those who lost a job last time, in 2008, are the ones
who got jobs, and 5% of them said that their jobs were better
paid. Some people have gone into employment and it has been worse
employment. We do not believe that disabled people should be
at the bottom of the employment structure and should get the worst
jobs in the UK economy, because there is a hell of a lot of talent
Q12 Stephen Lloyd:
Who does? Are you proposing that, say, me, the Coalition Government
or what have you, or the previous Labour Government, believe that
the only jobs that should be available for disabled people are
scraps? That is ludicrous. Yes, there will be people in 100
years, and I know this, who will not employ disabled people because
they discriminate against disabled people. There will be people
in 100 years who will not employ black people, women, men
or whatever. The difference from where we are now compared with
20 years ago, the direction of travel, is profound. Without
going into the whole detail of the Work Programme, I should say
that the whole point behind it, which actually was beginning to
be proposed by the previous Government x number of years
ago, is that to get to help more and more disabled people into
worknot from a patronising perspective, because a lot of
them have exactly the same skills as everyone elsethey
are going to need more support to get them into work and to hold
them there. If you are running a very small business, quite often
you do not have the resources that a large public sector or a
We know and I passionately believe that, if the right
support is there for a lot of people with disabilities, those
smaller businesses will see that they benefit. We are not saying,
"Do away with Remploy"; we are not saying, "Close
all the factories." I wholly understand that, for historical
reasons, they need nurturing, taking care of and managing, but
broadly managing down. If in 70 or 80 years' time there is a
factory where 30% of the people have a disability, but they are
hired as they should be because they are tremendous workers and
have a little bit of support to ensure that, if they are blind,
they can actually manage in the same way as someone who is not
blind, and they are there for the skills, then I know we will
have made real progress. If in x number of years' time,
you have a factory that is still 100% disabled people, and it
is the only way they will be employed, that would be a real backward
Chair: Do you have a question?
Stephen Lloyd: No.
Chair: I do not know whether
anybody wants to respond to that.
Phil Davies: Well,
we have gone from 9,000 to under 2,000 disabled people in the
factories. That loss has been the loss not of union membership;
that does not matter to the big unions in terms of numbers. That
is not why we are here; we are here because we passionately believe
that Remploy factories should play a role. No one can guarantee,
and we have seen no figures from Government, any Government, how
long the jobs are lasting that Employment Services and other providers
find. There has been very, very little data. I can remember
six years ago us meeting with the DWP and asking them to monitor
a disabled person, right through their life in terms of job, and
see if they met the supported employment requirements. That has
never been done. I do not think anyone can put their hand on
their heart and say that the jobs that some disabled people are
finding are sustainable.
Q13 Harriett Baldwin:
I have this GMB-Unite leaflet, which went out to all the workforce
in the factory, which I imagine you recall. It is about the voluntary
redundancy scheme, and it gives reasons to say no to the redundancy
package. It says things like, "You will lose your dignity.
You may lose your health. You may suffer from depression. You
will lose your friends at work. If you take voluntary redundancy,
you lose your integrity and humanity." I just wondered if
you thought that that language is appropriate when communicating
with a workforce that has some learning difficulties and mental
Phil Davies: We
have strayed into the current situation now. The current situation
was brought about because of a lack of consultation. There were
decisions made, we still do not know when, about the voluntary
redundancy. There was no plan by the company whatsoever, and
there is still not.
Q14 Harriett Baldwin:
Could you answer my question?
Phil Davies: Yes,
I am going to come to that with reasons for it. There is no plan
after the redundancy for what is going to happen, which is a very
unusual situation. In fact, I have been a national officer for
23 years and never known a company not to have a plan after
a redundancy. The facts of whether we like it or not, and in
the pack that we providedI take it that everybody has had
the pack of evidencewere just two. We could have put 22
or 102 letters from people who have contacted us.
Q15 Harriett Baldwin:
You are talking about the process that you are going through.
I asked a very specific question about a leaflet that your union
has given to a workforce, which you said earlier has issues around
mental health and learning difficulties. I just wondered if you
thought that that language was appropriate.
Phil Davies: We
gave them what we believed would happen, and what has proved to
have happened in 2008 when people left a factory and got no support.
Now yesterday the company went a long way to saying what support
the 800 people were going to get, but the fact of the matter was
that 2,500 people disappeared out of Remploy with no support.
What our people are saying is they have lost their friends; they
have lost their communities; they have lost their jobs; their
health has deteriorated. These are facts, whether we like it
or not. Out of the 500 disabled people who are going to leave
at the end of May, that is going to happen to some of them.
Q16 Harriett Baldwin:
You think it is appropriate to say to someone with learning difficulties
who is taking a voluntary redundancy package that, if you take
this voluntary redundancy package, you lose your humanity. You
think that is appropriate. You stand by that. That is all I
wanted to ask.
Phil Davies: Well,
let me answer you. I think it was appropriate for us to do what
we did in all the circumstances. I think it was appropriate to
tell people that, in Mansfield, two people with mental health
problems, because they did not get any help from the company,
lost their homes, and it was the trade unions that had to go in
and go to social services. It was the trade unions that had to
give them legal aid to right that. Yes, they did lose their houses;
they did lose their humanityabsolutely people being on
their own, left on their own, with no friends. The only hot meals
that they used to get were at Remploy. There was no support whatsoever,
other than shop stewards, like these guys sat behind me, running
around because they knew that that person was on their own.
Yes, we had every right to say to people, "Think
very carefully about accepting voluntary redundancy." One
person rang me up 12 weeks after he got his £30,000odd
and said, "I don't know what I've done with it. It's gone
and now I am in debt. Can you do anything?" It was the
trade unions that had to go to the social services, the trade
unions that had to get a financial person to reschedule the debt.
The problems that we have with some people when they leave the
community inside the factory are tremendous, and we have done
everything possible to say to people, "Think very carefully.
If you are at an age where you are going to work for the next
10 or 15 years, think very carefully about giving that job up."
Q17 Brandon Lewis:
Let me just ask Mr Davies something specifically on what he just
said. Bearing in mind what that advert says, there seems to meand
correct me if I am wrongthat surely there is a difference
between saying to somebody who is vulnerable, "This is what
can happen; here is the information," exactly as you are
saying"This has happened to other people; think carefully"and
the language used in that kind of advert, which is effectively
insulting somebody or telling them, "This is what you are
making yourself," before they have even made a decision.
That seems very much more like being scaremongering than informative.
Phil Davies: We
tried, and we will not deny it, to persuade people to stay in
Remploy, because we had seen the problems. We tried everything
in our means to persuade them. Do not forget that we were faced
with a situation when, the day they announced to the trade unions
under the 90day consultation, they were writing to every
single employee telling them about voluntary redundancy. If you
want to look at the tactics of being called in one at a time in
some factories, being persuaded that it was best for them to take
voluntary redundancy, all sorts of promises being made to them
last time, not adhered to and not kept, I think our tactics were
I think as well it is very fine and dandy saying, "You sent
this leaflet to every member," etc. Our reps in the workplace
are very experienced at supporting their fellow members. Although
those circulars went out, there were factory meetings and people
were spoken to. Those people who have got learning difficulties,
those people who obviously have impairments of sight, etc, are
all supported by the reps at the workplace. It is not just send
a leaflet out and that was it; there was proper support; there
were proper briefings given to those members to expand on the
bullet points in the leaflet. Please, do not just think we just
send it out and that is it. It was part of a proper supported
Les Woodward: Can
I come in there? As shop stewards, we are at the sharp end of
everything. I can remember back in 2008 when the factory closure
programme was announced. There were colleagues of mine having
to deal with people locking themselves in the toilet threatening
to commit suicide because they thought their days of being a valued
member of the community and being economically active were over.
Coming back to that notice that went out, to be honest with you
that was very mild compared with what we have had to deal with
in the past with the way the company has acted and the repercussions
of the way that notices have been brought out.
Chair: I need to move
on. We have some questions on the relative costs of supported
Q18 Karen Bradley:
The National Audit Office review concluded that the average cost
of providing employment by Remploy in a Remploy factory was between
£18,000 and £20,000 per year. I understand that you
dispute this figure, and I wonder if you could tell the Committee
what you think the correct figure is and how you account for the
Phil Davies: The
figure was not so much disputed, but the reasons for the figure
were disputed. I think it is higher now; I think it is around
£26,000 per disabled worker. The reasons we disputed how
they got to that figure were that you would expect that in that
particular factory the people in it were costing £26,000
a year to employ, but they do not carry the costs of just the
factory, of course. This is where we disputed it. There is central
services, which is an entity outside the factory network. There
are massive costs from consultants, £5 million or £6
million I believe. The company will give you the exact figure,
no doubt, from 2008. All that goes in to alter the costs. It
is not somebody walking into a factory making furniture and losing
heaps of money; they have to sustain that outside body of management.
We have said that there were massive amounts of cost
savings to be made. We are talking millions of pounds herethe
use of consultants, the numbers of management. All these get
tagged on in a formula on top of that factory's actual sales and
what it costs to produce it. If there is any mismanagement
or too much management in the whole of Remploy, that gets passed
on, so that is why that figure is so high. We dispute that, because
a commercial company would never have the 30 or so people in HR
that there are now. There will still be after this redundancy
11 HR people in the businesses, who have to be paid for. That
cost comes on top, whether they do any work or whether they are
busy working overtime because they have loads of work; that cost
is still allocated to that factory. The bigger the management
structures are, the more spending worries in nonproductive
places, then the higher that cost is that is passed on. That
is our argument.
Q19 Karen Bradley:
What do you think the correct figure is?
Phil Davies: We
think that the factories should be more autonomous. We are getting
into a debate of where Remploy should go. There has been a trial
with five factories where these costs are not being allocated,
or most of the costs, to the factories. Yesterday we were told
that, without those costs and without some of the other costs,
the cost has come down to about £5,000 to £6,000. Straight
away you can see they have done this exercise in five of the small
factories. They are calling it social enterprise in the factories,
where they actually go out into the community and get work from
It is a similar basis to the GMB and Unite Workers'
Cooperative that was set up in York when the York factory was
closed. Last May, we set up a workers' cooperative, owned by
disabled people for disabled people, on very, very few funds.
This May we are starting to go forward. There are six people
there; that is all. Some of these factories are going to be down
to five or six people, Worksop for one. When I said earlier there
needs to be a change, it is that sort of change. We need to get
rid of the costs in Remploy, because it has become a place where
there are some very highpaid jobs, and you can see the difference
in the redundancy packages from the management structures, where
a manager with a short notice will go out with £90,000odd
and someone with 25 years' service will go out with £30,000
on average. We have done the figures; we have put the figures
into this pack for you to look at. These costs are what are drawing
Remploy down. We want to see more autonomy in the factories.
Q20 Stephen Lloyd:
Is not one of the challenges with the costs, which my colleague
was talking about, that you have the capital infrastructure of
Remploy that has built up over a number of years? I agree with
you; I think it is clunky. I certainly agree with you that I
much preferred the smaller focused social enterprise companies
employing disabled people and going out to the community. I think
that is a fantastic idea and I am very supportive of that. The
problem we have with Remploy though goes back to my colleague's
quote of whatever it is£20,000and you saying
there were lots of on-costs that bring it to that point. We do
not dispute that.
The challenge is that, when you have a clunky, capitalintensive
infrastructure that has built up over many years, whether you
like it or not, and I am inclined to agree with you on some of
the salaries that some of the senior management are paidand
believe you me I am going to be quizzing them about it laterthe
reality is it probably is about £18,000 to £22,000 per
disabled person, because of the infrastructure that has built
up over a number of years. You cannot dispute that, surely.
If you look at this round of redundancies, the pyramid, if you
like, is becoming less of a pyramid and more of a straight cylinder,
because there are significant numbers, over 700 disabled people,
going out of Remploy on this round of redundancies; 99% of shop
floor workers who applied have been allowed to go. Fewer than
50% of the management and staff who applied have been allowed
to go, and the company has admitted that they are using upwards
of £15 million of taxpayers' money to fund this redundancy
exercise. What it is doing is actually increasing the cost per
supported employee by over £1,000. Where is the logic?
Why are we using taxpayers' money in this way? They are going
backwards instead of forwards.
Q21 Karen Bradley:
The only point I wanted to make, which was following on from Stephen's
point, was that, if you are looking at an organisation with between
4,000 and 5,000 employees, 11 HR staff in my experience of the
private sector does not sound that much. That is just a fact
of life nowadays. You need that big back office to manage that
number of employees. If you had a private sector organisation
with 4,000 employees and only 11 HR staff, they would be doing
very, very well. I think the issue here is, yes, we want to quiz
the management and we want to look at the backrooms and the back
office costs but, when you are looking at a big organisation like
this, there inevitably are going to be those costs.
Phil Davies: The
cost of the back officeSaint Gobain, Solaglas, which I
deal with, employs over 2,600 people, three HR.
Q22 Chair: Can
I just ask about the issue of the viability of the factories?
We know now the numbers involved in the voluntary redundancy.
Although it is not in my own constituency, I know the Aberdeen
factory well; there are 25 employees and 11 will be allowed to
have voluntary redundancy, which leaves a factory of 14 in a building.
This comes back to the back office costs as well. It is a building
that used to employ 100. They have sub-let part of it, but not
very much of it. My question is: now that we know what the final
figures are going to be with the number of people left in the
factories, what is your assessment of the viability of some of
those factories? We know that management has said the factories
will close, but what is your assessment of that?
We have got grave concerns for their long-term future. We either
have to seriously find alternative premises for some of those
smaller factories to house them in a more economic environment,
or look at significant dividingoff of some of the larger
buildings and finding alternative tenants then to take over part
of those buildings. At the moment, the problem with that is there
are, as we all know, because of the closures and redundancies
that took place, lots and lots of empty spaces all over, with
lots of landlords desperate to get tenants, who therefore will
offer very small rents.
You either own the property, so at least you only
have the rates to pay on it and you have the maintenance, or we
feel that a lot of these factories are just being set up so, in
two years' time, they close. There is no doubt about it; our
suspicions are and we understand that the board has made a decision
to close Remploy. It would be interesting to find out from them
whether that is true, because we are being told they have made
that decision to close the factories completely.
Certainly my colleague Lyn Turner in Aberdeen rang
me last night, and he is absolutely distraught about the future
for the Aberdeen site in particular. He said they were starting
to take it forward and this is just sending it backwards, and
that is the biggest worry we have got. Worksop, which is a GMB
site, is another prime case. It was doing well; they were actually
talking about, we are told, asking one of the tenants who they
sub-let part of the building to when they did not need the space,
to leave. Not many weeks ago they were telling us that, and the
next minute they announced redundancies and they are going to
let five out of 12, is it, go. You will end up with a factory
with about seven people in it. We are just concerned that some
of this is just a recipe to encourage closures in a few years'
Q23 Brandon Lewis:
I would like to start to turn towards the modernisation plan itself,
because part of Remploy's plana huge partis the
expansion of the Employment Services business. Looking at the
figures there, that does seem to be more cost-effective and, touching
on what Stephen was saying earlier, is more likely to bring people
into the more open workplace. Do you agree that that is more
costeffective and that, if that was able to expand, that
could be a better solution in the long term?
Phil Davies: We
welcome any expansion of any part of Remploy, including Employment
Services, that will lead to sustainable employment for disabled
people. We welcome that. Employment Services has its problems.
It has just recently not won a single contract in the Government's
Work Programme, not a single contract. They are having to TUPE
over 200 of their workers, some of the best people that they have
got, because the contracts have been won by other providers, and
they are having to become a subcontractor and TUPE over in another
direction about 50% of what employees are going to lose. So it
is not all plain sailing there but, in answer to your question,
of course we would encourage it. Why would we not encourage it?
I said earlier that it does not need to be Employment Services
only; it should be a combination, but I would like to see Employment
Services using the factories more, because there is a need for
this initial training of people.
Now, we are seeing a lot of trainees coming in and
being heartbrokenwe had an argument in Les's factorywhen
they are going out after eight, nine, 12 weeks, because they are
going nowhere and they have no job to go to. They have got that
taste of employment in Remploy, working with other disabled people
and learning skills, and then somebody says, "I'm really
sorry. Your funding is up. On your way." These are young
people, and they were not on their way to other jobs; they were
on their way back to benefits. It does need to change. We want
to see Employment Services playing an active role, of course we
do, but we want to see core workforces in these factories that
can be places of excellence. We do not accept it is impossible
to bring the work in.
Coming back to the salespeople, we were told quite
clearly on three occasions, "We would have loved to have
accepted some of the salespeople as redundant who had volunteered,
because they are not up to the job, but we cannot do that because
we cannot replace them." These are nondisabled people.
If they are only acting or performing at 30%, that is 30% better
than nothing at all, because we cannot replace that man or woman.
No commercial company would have to run the organisation under
those sorts of circumstances, with the DWP saying you cannot replace
people in key positions.
Les Woodward: The
way we have seen it on the shop floor comes back to what Kevin
said earlier. We see now, and we have seen it over the last 10
to 15 years, mushrooming of management. You have managers managing
managers, who have managers to manage who manage other managers.
The whole system needs a revamp. Coming back to your point,
we said back before the last round of factory closures and voluntary
redundancies that Remploy factories should be an integral part
of any supported employment programme in the UK. They work hand
in glove with Employment Services to provide the training, as
Phil said, and also to provide support.
Coming back again, we are seeing a lot of young peoplein
their mid20scoming in who have never done a day's
work in their lives. It is not their fault; it is because they
have not got a chance. They have not had the chances in life.
Coming into a Remploy factory where they are working with other
disabled people gives them the supportnot only the support
of training, but the peer support as well of people saying, "Welcome
to the world of work. Here we are."
Chair: I am going to have
to move on, because we only have 10 minutes left and we still
have all the questions on sales and procurement.
Q24 Stephen Lloyd:
You mentioned about the last 10 to 15 years. I would like to
bring you to the modernisation plan. I will just flag up that
one of the things I do agree with you about is that one of the
challenges of the last 10 years is that suddenly managers mushroomed
in the public sector, but that is by the by. The DWP say that
the sales and cost reduction targets set in 2008 proved unrealistic
and unattainable from the outset. Was the GMB consulted over
the setting of these targets and did you think they were achievable
at the time?
Phil Davies: Yes,
we were consulted about the targets. We did feel they were difficult
targets, but we felt that they could be achievable. There are
billions of pounds' worth of public procurement spend in the UK,
and one of the reasons why we asked Kathleen along today was just
to briefly tell you what the changes in the Directive werewhich
have never been exploited, we do not believe, by Remploy, to the
full extent that they should have been. Those changes gave a
very, very good opportunity for Remploy to do a lot better than
what they have done. It has been very disappointing. Now when
we talk about public procurement with the senior people in the
management, we are not getting any response; we are not getting
any enthusiasm from them. The first six to nine months, they
were enthusiastic about it, but that seems to have disappeared
completely within the company.
Kathleen Walker Shaw:
If I could maybe just highlight that by example to give you the
background to the legal change in the European Procurement Directives.
They gave us a contract status, which allowed public authorities,
to use an American term, to set aside, to reduce the pool in terms
of a contract to only supported employment workplacesbut
within that, any enterprise in Europe where at least 50% of the
people working were disabled people. We started this debate with
the European Commission when the priority suppliers scheme was
taken away in 1994. The effect that had on the level of contracts
going into Remploy and other supported employment workplaces,
within 18 months of its withdrawal, was quite phenomenal.
In the MOD, in terms of public contracts there, from 17 million
down to 10 million; in textiles, it was even more dramatic,
which was a fairly labourintensive part of Remploy factories
at the time18 million down to 3 million.
We worked from 1994 until 2004, when these Directives
were agreed. Those of you who know European law know that anything
to do with the internal market is an extremely difficult area
in which to change law, because it is very commercially driven.
We managed to get this reserved contract status in the body of
European law in 2004, after a 10year struggle. I was the
leading party at European level in terms of that lobbying, and
I can tell you that anybody in this room would be forgiven for
thinking that was actually the role of Remploy management, as
the people, as the employers and senior managers. However, it
was a union that had one officer in Brussels and one national
secretary at national level, and our colleagues in the other unions
who did not have a European facilitator, managed, with the co-operation
of our supportersand they were crossparty and crossMember
State at European levelto change that legislation. We
had no support or virtually no support or encouragement from Remploy,
apart from one member of staff in Remploy, who has since left
the company, who actually actively supported this.
I am not involved in the negotiating or the organising
of Remploy, but as somebody who was a policy adviser on that issue
and somebody who influenced that, I could only interpret that
as a conspiracy to fail. If the public procurement reserved contract
status was being allowed to be used, and Remploy had actively
sought to use that legislation and maximise the scope of that
to show their own commitment to it, we might be looking at a very
different thing. Mr Lewis was talking about expansion in Employment
Services; the factory capacities would have also been increasing
their productivity. It has been left to the trade union side
to do that. Serious questions have to be asked. Surely the purpose
of management of a business is to get contracts. If they are
leaving to the trade unions the very huge mountain to climb to
change European law to facilitate contracts going into supported
employment, I think that gives us a very fundamental basis for
wondering why we are where we are with Remploy.
We experienced the same problems when we were going
through the UK implementation stages. Again, it was the GMB and
our fellow unions that were driving trying to get positive guidance
with the Government. We actually managed to encourage them to
include the wording that each public authority should have at
least one contract with supported employment at any one time.
Sadly, that has not been achieved, and it is currently still
in Government guidance that that should be the thing.
If we had every public authority just putting one
contract into supported employment, our factory capacities and
the business capacities would have been up, but we have seen no
will from Remploy management to actually do that. In your packs,
in appendix 17 and 18, you see two letters written back to Members
of this House where Remploy showed no interest in going for a
contract. We are not sure whether Remploy went in, but they certainly
did not get on the shortlist of another contract in Stirling.
Stephen Lloyd: On those
specific things, on the procurement side we will be putting those
questions to the managers when they come afterwards. In fact,
it is one of the things I have got flagged up, so I have taken
some of your lines and I think they are important. I will challenge
them on that.
Q25 Glenda Jackson:
Following on from what you have said, there has been no attempt
by the Remploy company to pursue contracts. You said that you
believe that they had a commitment to fail. What is the benefit
to them if the company does fail? Can you hazard a guess? Have
you any idea? What is in it for them if it fails?
Kathleen Walker Shaw:
In my assessment, and as I say I am not involved in negotiating
the organisational aspects with Remployand I think in some
ways that allows you to take a step back and just ask some of
these very fundamental questionsthere was an agenda within
Remploy to try and undermine and, if not, get rid of the factorybased
employment within Remploy, and concentrate on the Employment Services-related
I think that was a mistake. It then restricts the
ability to offer a variety of employment opportunities for people
in diverse areas of skills development. That is my considered
view: that they did not want manufacturingrelated and productivityrelated
contracts; we saw a very halfhearted approach to that.
It was the GMB and Unite that actually encouraged the Office of
Government Commerce Buying Solutions, after several meetings,
to actually open a national framework contract in 2010. Again,
it was our input and political influencing that managed to get
that contract, and similarly with the contract for the Welsh Assembly
framework. Again, we were pushing water uphill to try to encourage
Remploy to go for all of these things.
Q26 Glenda Jackson:
Now you have got that water up the hill and the bucket in that
sense is full, you are saying that they are still failing to pursue
the potential of that. Is it your perception that it is because
they simply, either then or now, want to be rid of the kind of
manufacturing aspects of the company?
Phil Davies: I
do not think there is any doubt whatsoever that the board of directors
of Remploy want to get rid of the factory network. I have been
round Remploy for 22 years and I am absolutely convincedand
I was more convinced yesterday than ever. Why is it that the
DWP has put £47 million into the pension fund, right
away in one month, and that the company has set out to complete
the deficit by 2014? The rumour is that the board strategy will
be to close more of the factories in 2014.
Q27 Glenda Jackson:
What is the benefit to them of that? That is what I am trying
to pursue here. Is it just that they do not like factories, or
is there some economic reason why they perceive that the company
would be better, would be stronger, would be more capable in employing
disabled people if the factories went?
Phil Davies: It
would concentrate on its Employment Services arm. There is no
doubt it is more difficult to run factories. The economic climate
and the very fact that you have to go out and win these contractsthey
are not going to be given to you; you have to win themis
more difficult. The people in the factories are there for long
periods. It is just more difficult to do it. It will be cheaper,
economically to the UK Government, if they did not have any factories.
There is no doubt about that; whichever Government was in, it
would be cheaper. All the signs are that in 2014 we will be either
back here again or we will be in a campaign to stop the final
closures. Who would have thought in 2008, after years of discussions
with Government at the highest level, right up to Prime Minister
level, that we would be sat here again with 700 redundancies,
500 of which are disabled people? What is the message coming
from this redundancy that is clear? Some 507 or whatever it was
applied for voluntary redundancy, and 99%, 501, were accepted.
Nondisabled people were not accepted.
Q28 Glenda Jackson:
Is the board of Remploy being driven by Government, regardless
of the political nature of that Government? Is that what you
are essentially sayingthat this is coming from Government,
whichever party happens to be in?
Phil Davies: It
is coming from DWP; whether it is coming directly from Government,
we are not sure, but certainly the officials in DWP are complicit
in what is happening. You have to ask yourselves why. Every
final pension scheme, every one, including the GMB's and Unite's,
is in deficit because of the stockmarket and what is happening.
There is not a finalsalary scheme that we know about that
is not. Even the Pilkington one, which was the jewel in the crown,
is in deficit. Everybody is planning a 15year recovery.
Part of the agreement with Government is that, if Remploy is
ever closed down, the pension scheme will be guaranteed. The
recent move tells me for sure that there is a plan ahead, and
the rumours on the shop floor, as Les is probably going to come
in and tell you, is that they have already set the date.
Chair: If we are going
to put these points to management, we need to wrap up this session.
Kate still has some questions.
Kate Green: I do not need
to ask any questions.
Chair: Obviously, things
are going on.
Les Woodward: Can
I just make one quick point? When we had the negotiations on
the consultations on the modernisation programme the last time
around, in 2007 before the 29 factories closed, there was a very,
very senior DWP civil servant who sat with us. Subsequently, we
found out after the employment tribunal that this particular person
was advocating the closure of all the Remploy factories at that
particular time. To come back to your question of who is driving
it, my personal opinion is it seems to me that the senior civil
servants or the advisers of the DWP are the drivers behind it.
Q29 Glenda Jackson:
They only advise; they do not make the decisions. What I was
trying to actually pull out was whether the board of Remploy is
as much a victim of Government decisions in this area as the workforce.
They cannot make the decisions perhaps that they would like to
make, because the Governmentand I stress again the Government
of whichever political persuasion, because this did not start
last Mayare actually pushing for the removal of the factories.
Les Woodward: The
then board of directors vociferously argued against that particular
course of action that was advocated by this senior civil servant.
The board of directors very much make their own decisions.
Kathleen Walker Shaw:
If I could maybe just clarify that in terms of just following
on from the points I was making earlier, some of the political
decisions or the thoughts and the views of Government officials
and civil servants within the Department of Work and Pensions
were partly probably because of a frustration about some of the
figures that we have discussed here today, which are not impressive,
in terms of the lack of productivity. I think where there might
have been a pressure coming from Government or civil service,
in terms of the direction of Remploy, it is a result of what they
are seeing on paper about the lack of achievement. The problem
there is out of a frustration with the failure to step up to the
task by Remploy management.
When I was going through the work to try to get the
public contracts law through, part of my work within that at the
early stages was confecting the legal argument. I thought it
would be very helpful to speak to a range of procurement officers
across the countryfirstly, who are familiar with working
and contracting to supported employment, and secondly, for them
to legally advise me on how this scheme would work if we did actually
implement it. I am not going to publicly mention the various
names, because it was said to me in confidence, but I have to
say these were not isolated comments that came to us. Systematically,
we had unanimous support from public procurement officers at various
levelsgovernmental, regional government and local authority
contractorsfor what we were trying to do.
If I had £5 for every time I heard them say,
"We support completely what you unions are trying to do,
but we have to say that a lot of us in the procurement officer
circles are sick to the back teeth of the complacency that we
have to face from salespeople and management of Remploy, who seem
to think that they have got a God-given right that they are going
to get a contract. Their apathy and laziness that everything
is just going to fall in their laps is so frustrating to us as
procurement officers that often, although we completely support
wanting to promote job opportunities for people with disabilities,
we are tempted not to give that contract because of their complacency."
We are in a selffulfilling prophecy there; whatever DWP
has now decided for the future of Remploy lies very squarely,
in my view, through management failures. How different could
that have all been if we had the reserved contract status a lot
earlier, and management had the will and vision to see that they
could create jobs for the future of disabled people in this country?
Q30 Chair: Sorry,
I will have to stop you, because we are now 15 minutes over time,
so I am going to have to end the session there. I am really sorry,
because you have lots more that you could have said, but we do
have your written evidence and the pack that you have talked about.
Can I just thank you very much for coming along this morning?
Obviously, we are now about to put some of these points to the
management. If you think there is anything that you did not get
to say this morning, then please provide it to us in writing.
Anything in writing has equal weight to anything you said in
person. Thanks very much.
Phil Davies: Thank
you for listening.