A New Strategy for the Employment of Disabled People

A new concept in the field of Employment

By Phil Davies, GMB National Secretary for Manufacturing Section
On Behalf of the Consortium of Trade Unions
January 2011- updated October 2011

INDEX ___________________________________
Index Summary of Cost Saving Introduction Remploy Board Members in 2009/2010
Non Executive Board Members

Page 1 2 3
4

Overtime Working Remploy Senior Managers Senior Managers EB, ES, Grade M1, X Scales Communications Department Remploy Boards and Committees ES Senior Management Structures Bonus Payments Senior Managers and Directors Consultants Purchasing of Materials Employment at Remploy Working from Home Energy Expenses Meetings Costs Maintenance Costs Property, Leases and Rents Car/Car Allowances/Petrol Allowances Car Allowances Petrol Allowances In house Sales /new sales
Development strategy/ growth opportunities Remploy Learning/Training & Development Public Procurement Conclusions

5 6 7 8 9 10 11 12 13/14/15 16 16 17 18 18 19 20 20 21 21 22 22
23 23 24 25/26

Summary of Cost Saving

We know that Remploy received 119m from Government; 69m goes to Remploy factory sites which on average equates to 1.27m per factory. 34m goes to Employment Services. We are also aware that approx 138m is the total sales from the 54 factory sites and reduces the cost of running the factory sites considerably. The cost of sales is 93m and leaves approx 45m which must be taken into account when you look at the profit and loss accounts. We now understand that there are 154 employees paid above 45,000 per year. This figure excludes bonus and overtime and we suspect that when you take these two items into consideration the figure increases to 220. There are 3238 employees most of whom are disabled and who earn less than 16,000 per year. The cost of travel for all employees has escalated to 2m, the cost of company cars to 2.4m and the cost of car allowances to 1.1m; a total cost of 5.5m. The main savings come from the following areas: Cars 2.1m Bonus payments 1.3m Reduction in senior managers 14m Reduction in overtime 2m Reduction in consultants 5m Better purchasing of materials 7m Possible site Mergers (not until other savings achieved) 2.1m Factory relocations - downsizing or subletting/ multi finance initiatives Change Business focus of some factories - multi finance initiatives We believe that the summary of the main saving is 31.1m but if you look at all other parts of the document this saving could be considerably increased. The figure of 138m losses for the factory network is not true. We believe that if all the measures outlined in the trade unions document are taken on board and implemented then the cost of the factory network would be approx 35m per year. Put another way when the profit from sales is considered and taken into account the cost per disabled worker to the State could be as low as 7,000. When you also take into account the fact that tax and insurance is being paid in and benefits are not being paid out this figure could be substantially lower. Phil Davies GMB/Kevin Hepworth Unite On behalf of the Trade Union Consortium

Introduction
The development of the supported employment programme within the UK and its European partners has been taking place since 1946. One major part of the UK economy that has increased since 1946 is the cost of unemployment which for a disabled person could be as much as 25,000 to 30,000 per year for each disabled person not working when you take into consideration the revenue lost in tax and national insurance contributions the cost could be higher. A disabled person who is not working will probably receive higher benefits than a non disabled person. Housing benefits and careers allowances are only the tip of the iceberg. The unseen and unmonitored costs start to mount up when you consider that a large number of disabled people who were made redundant when Remploy closed 29 factory sites now have severe health problems and the use of the NHS has greatly increased. We would estimate that this cost could be as high as 20,000 for some disabled people. The lack of spending power in the local and national community also means that there is a knock on effect. The fact that it is better to have disabled people in work than on benefits seems to have been lost on the last government. The trade unions recognise that these proposals will lead to some 310 job losses over the next 12 months but you cannot reduce the hourly paid and factory staff by over 2000 employees and end up with more senior managers than before. Of course there is a need to spend money effectively and the trade unions welcome an opportunity to prove that this can be done in Remploy. There are 20 main areas of concern where substantial savings can and should be made; the total savings that could be generated are over 25m to 35m per year or 20% to 30% of subsidy and which could be used to employ more disabled people in sustainable employment with a leaner and more professional management structure The 20 areas are: 1 Consultants Costs 2 Senior Managers 3 Board of Directors (both non Executive and Executive) 4 HR Department 5 IS Equipment 6 Cars 7 High leases and rents 8 Outside contractors 9 Procurement purchasing 3

10 Premises (Possible site Mergers/ Factory relocations/ downsizing/ subletting) 11 Energy 12 Meeting costs 13 Expenses 14 Work from home 15 Private healthcare 16 Reduce number of businesses to 3 17 In house sales 18 Reduce maintenance costs 19 Further reduce overtime costs 20 Employment at Remploy

Remploy Board Members in 2010 Accounts

There were 5 non executive and 3 Executives plus the Company Secretary, Guy Phillips but it is not clear how the other Directors fit in, these include Alan Hill, Beth Carruthers, and Jean Cabena. We are also unclear what the position of Sue Butcher, HR Director is. It is also very unclear how the other 8 or 9 directors of Enterprise businesses and Employment services fit in. Mrs Butcher started at Remploy on a contract or as a consultant and after approx 6/9 months she was appointed as HR Director on an undisclosed salary. The vacancy was never advertised and Remploy broke their equality policy. Mrs Butcher may be paid as a consultant but we have to estimate her salary at approx 150,000+ per year. We have not seen her listed in the 2010 accounts. All the usual benefits according to the 2009/10 accounts and the cost of the Executive Board members were as follows:

It does not end here. We believe that the hidden employment costs including employers NI and cars etc is around 280,000 for the group named. This does not include private healthcare costs. The other additional costs are expenses and overnight accommodation for all the directors which is up to 150,000. The final cost of these directors is admin, office and PA costs which we also estimate at around 400,000 to 600,000. In addition we understand that there are many other employees with Director status who form the EB & ES Boards: Alan Hill EB Managing Director Beth Carruthers ES Director Jean Cabena ES HR Director Chris Addy EB Finance Director Colin Scott Operations Director EB Richard Bennelli Sales Director EB 98,000 + benefits 98,000 + benefits 74,000 + benefits 74,000 + benefits 84,000 + benefits 87,000 + benefits

We understand that the company pension contributions for these Directors is around 30,000 Please note the company has not shared information from the 2011 accounts with the trade unions. This normally takes place in June/July each year (published early November) so some of the figures are estimated and we have left out the cost of the company pension contributions. In addition several of the directors are listed in the company structures such as Communications Director. A full list of employees with the title of director is in the Senior Managers section.

Non Executive Board Members

The accounts for 2008/09 showed that there were 8 non executive board members. The salary in a full year for 8 board members was around 62,400. This is not the full cost of having non executive board members. The accounts for 2010 show a reduction to 5 non-executives, a move towards the Trade Union suggested number of 4. We understand that around 60,000 was spent on overnight accommodation and travel expenses, this included costs for food. The total cost of the non executive board members could well exceed 150,000 when you include admin costs, hire of meeting rooms etc. We believe that 50% of this could be saved 75,000. The trade unions proposal is to return to pre 2000 and not to pay any of the non executive board members a salary. This was never asked for by the non executive members and it was introduced by a former Remploy Chairman, Alan Pedder to enable him to take a fee. We note that in 2008/09 the current chairman does not receive a salary and we applaud this choice. 5

There is no legal obligation to pay these salary payments. The reduction of the non executive board members down to 4 would save 100,000 per year. In 2008/09 two of the board members only attended 4 board meetings and one only attended 2 board meetings. Also the Audit Committee and the Remuneration Committee were very badly attended by the non executive board members. The 2010 accounts show a significant improvement in attendance after heavy criticism was given by the Trade Unions.

Summary of cost saving non executive directors: 110,000+ The trade union proposals for a main Remploy Board of Directors:
Chairperson Chief Executive Director Manufacturing Director HR Director for Central/ EB&ES Finance Director Non Executive Directors Company Secretary Unpaid (1) Paid (1) Paid (1) Paid (1) Paid (1) Unpaid (4) Paid (1)

This leaves a total of 9 Directors of which only 4 are paid. Do away with all other directorships.

Overtime Working
For the last 6/7 years the trade unions have complained about the amount of overtime being worked within Remploy EB and ES. It appears that overtime has decreased since the closure plan of 2008 but in real terms it has not. In fact the cost of overtime is now higher per person than it was in 2008/09 if you include time worked and not recorded as overtime.

The company in its usual way of distorting the figures has now introduced a new way of reducing the figures. Thousands of hours of worked overtime are not recorded in the wages department nor are these hours paid to an employee directly. The new method of allowing time off in lieu means that when some employees work overtime say for example 10 hours in a week, a minimum of 15 hours will be given to that employee as time off. No money changes hands but the employee receives a benefit in kind. Thousands of hours of overtime have not been recorded and no tax or NI have been recorded or paid to the Inland Revenue. In some instances the company has paid overtime and we believe that has amounted to around 1m across the whole of the company for 2009/10. We estimate that a further 1.2m has been the cost of the hours worked but not recorded. We believe that at least 2.2m per year can be saved by reducing overtime and closer working between all parts of Remploy including secondments and inter-working of employees. The cost of overtime must be looked at when 50% of the factory sites are working below 60% production capacity.

Summary of savings 2m Remploy Senior Managers

We now look very closely at the senior management structures within Remploy. The massive duplication of jobs and the distribution of wealth with some senior managers earning 5 or 6 times more than the lowest paid worker. A large saving can be made if we cut these jobs by 50% to 60%. Senior Managers EB and ES, Grade M1 and Ex Scales This is the largest cost centre per employee. We understand that there are 524 managers and only 2967 disabled employees in the company which in the case of the managers is higher than at any other time and most are non disabled. The scale of this management group is immense and not repeated in any other organisation with a turnover of only 135.223m in sales. To produce these sales the raw material costs were 86.120m; a massive amount for such low sales. The ratio for managers to workers is around 1:5 but in other companies it is 1:21. Staff costs of 100.512m and operating charges are 55.588m. The average person will be appalled at this situation. These costs are out of all proportion to the sales. The obvious cost saving must come from the high cost of senior managers, materials and operating charges which we understand to be inclusive of the corporate body rents, leases, cars etc. A total 252.244m income is not enough when you are looking at an expenditure of 240.580m. 7

The accounts for 2010 show a further decline. The staff costs for 2007/08 were 140.459m compared to 2008/09 of 104.585m; a reduction of 35.874m or around 25%. At the same time nearly 45% of the employees up to senior managers were made redundant or have since retired. These were mainly disabled people in Grades E to T and 1-8 the staff grades in the company.

The figures do not add up to an equal reduction in all staff grades and very few senior managers were made redundant in March 2008 or 2011. Very few senior managers are made redundant, only 47% of those who actually volunteered for Redundancy in 2011 were accepted; there have been no compulsorily redundancies although the majority of this group are nondisabled. A review is now long overdue to reduce the numbers of senior managers within Remploy to a more manageable number which equates to the size of Remploy and its sales. The trade unions proposals are very radical and it is proposed to remove a large number of senior and middle managers and directors but to keep the number of factory managers which has already gone through a rationalisation exercise with some managers now managing 2 or 3 factory sites. The factory manager is an asset to Remploy and an essential part of the structure. The target of the trade unions would be to reduce the M1 and Ex Scales by 50% to 60% with an estimated saving of around 13.25m to 15.25m per 8

year. The company will not be affected by these cuts. This is realistic and to show the scale of the current immense situation we have provided a wall chart which can be shown at each meeting. The number of senior managers is totally unacceptable and unworkable. We can further illustrate where the saving should come from in the staffing by looking closely at a number of functions within Remploy including HR. This group is a very good example to look at. HR accounts for around 50 employees but the company does not operate a traditional HR or traditional personnel function. Very few individual cases or employees are taken up outside of the grievance and disciplinary procedures. A cloud of secrecy hangs over the HR department and in particular HR Direct. Very little time is now spent by the HR Department on industrial relation issues. The contact between the senior HR director and the senior trade union officials is minimal. Employees have little or no contact with HR. The HR function or structure is as follows: HR Director Central Services & EB Existing Board member? HR Director for Employment Services HR professional solicitor for both EB and ES + A legal department + HR Direct The additional jobs with HR are 20 and 38 jobs respectively. The trade unions proposals are as follows: Director of HR for ES and EB HR Advisor for ES and EB Training Advisors Equality Advisor PAs with shared responsibilities Total jobs in one HR Department Number of jobs 1 6 4 1 5 17

The trade unions further suggest that the HR director job be combined for Central/ EB & ES and the employment lawyers job should disappear as should HR Direct. A new leaner HR function within Remploy is required working closely with the trade unions on issues that affect disabled people.

Communications Department
Currently there are 14 employees within this department including a new communications director and what is now known as an executive position. There are 8 executive positions. The department is far too large and communications within Remploy are at an all time low despite this new department being created. 9

The trade unions proposal is to reduce this department to just 2 heads of communications plus 1 administrator or PA; a cut of 5 jobs.

Summary of savings around 300,000

We would also cut the number of publications which are not read to just 1 per year (EB Today & ES publications).

Summary of savings around 250,000 Remploy Boards and Committees

At present there are 3 Boards within Remploy. Main Remploy Board & Executive Board (Incorporating the remuneration committee & Audit committee) was up to 14 members, 8 non exec; 5 exec + legal sec now 9 members? Enterprise Business Board 8 members Employment Services Board 6 members The trade unions proposals are to abolish all these Boards and have a small but skilled Board of no more than 9 people including non executives to meet 5 times per year instead of 6. The 3 executive directors and the company secretary will make day to day decisions.
Chair (Gratis)

Non Execs
(Gratis)

Chief Executive

Finance Director

Manufacturing Director

HR Director

Employment Services Director

Enterprise Business CCTV Social Enterprise

HR Team for EB & ES

Recruitment Retention Rehabilitation

Summary of savings around 600,000

The management structures also include the following teams: EB Finance EB Sales & Marketing Social Enterprises Corporate Purchasing 8 employees 9 employees 9 employees 14 employees 10

EB Operations HR Central Services Health & Safety *see notes on health and safety Internal Audit Team Property Services Team Central Services *see notes on Property Services PMO Central Services Finance Central Services Leeds Finance Central Services IS Department Legal Team Central Services Banbury Central Payroll EB Supply Chain Automotive Building Products CCTV Operations Commercial Furniture EB IS Team E-Cycle Electronics Filters Front Line Textiles Education Furniture Healthcare Off Fulfilment LGCB Sites EB Packaging Team

9 employees 17 employees 8 employees 5 employees 7 employees 16 employees 16 employees 25 employees 20 employees 4 employees 8 employees 13 members 8 members 17 members 8 members 19 members 9 members 10 members 10 members 11 members 11 members 29 members 13 members 15 members 21 members

Proposed total M1 managers and Ex Scales only 214

Employment Services Senior Management Structures

ES Board HR Team Finance/PMO/IS Employment Services Operations Regional Operations North West Glasgow East England London South West Central Operations Banding Strategy Programme Management ES Personnel Group ES Quality Team & Supply Chain ES Service Bid ES Strategic Partnership Wellbeing Services ES Partnership Management 6 members 16 members 18 members 11 members 28 members 3 members 11 members 32 members 10 members 19 members 17 members 6 members 6 members 11 6 members 20 members 27 members 13 members

Directors and Consultants There are over 524 M1 and Ex Scale managers within ES/EB far too many. We recognise that some members sit on more than one Board or committee but the trade unions proposal is to reduce M1 and Ex Scales to 214, a reduction of 310 jobs.

Conclusion
Massive duplication; too many different committees and teams Unnecessary functions not relevant to the companys needs Far too many HR employees Too many directors and far too many full time consultants No need for large departments such as property, legal, HR Direct, health & safety which is dealt with separately Too much red tape, people protected from working to targets Too many jobs duplicates Finance no central control Purchasing no central control Policy massive savings to be made More power to the factory managers for decision making

Summary of savings 13.25m to 15.25m

A long term, in depth study right across the whole of Remploy is needed which should not be carried out by consultants. A team of trade union and independent management seconded from DWP should be used immediately and on an ongoing basis. Short and long term measures are listed: At least we should start by: _ Long term starting January 2012 to December 2013 to save 25m per year _ Short term starting immediate action to save at least 10m per year 2011/12 The restructuring of Remploy will unfortunately mean large job losses in the senior management teams. We are proposing that this can be done through voluntary and if need be compulsory redundancy with payments being restricted to the National Accord or less (not covered by the collective bargaining group). This will fall into line with what disabled people have to accept. The trade unions are not in favour of generous golden handshakes for senior mangers, equality in work and equality when people are unfortunate to leave employment.

Bonus Payments Senior Managers and Directors

In many respects the company is failing in its purpose and this can only be the responsibility of the directors and the senior managers. Less disabled

12

employees managed by more, in the main, non disabled managers. The monitoring of ES placements leaves a lot to be desired. The ethics of paying large bonuses every two years to the directors and every year to senior mangers is both unacceptable and unfair. The 2008/09 accounts showed 260,907 paid to corporate with 2 directors being paid a bonus of 37,000. The Trade Union Consortium would scrap these payments saving in todays terms 100,000 to 180,000 per year.

Remploy bonuses Business Corporate (central) Employment Services Enterprise Businesses Total Source: Remploy 2008-09 Managers 188,913 400,527 0 589,440 71,994 Directors 71,994 Total 260,907 400,527 0 1,315,000 661,434 1,520,713 51,000 160,300 1,366,000 1,681,013 2009-10 Managers Directors Total

1,366,000 was paid in November 2010. 315,000 was paid in January 2011. Total - 1,681,000 August 2011 - 1.9Million paid out

Bonuses paid to senior managers in 2011was 1.9m. The trade unions would again scrap these payments as there is no real incentive for the company to pay them. Performance of senior managers is not measured in any acceptable form. Bonus payments are not earned within Remploy and are seen by the disabled employees as being paid for nothing. The average bonus in 2009/10 was 4,497 paid to 288 managers. The total saving in 2009/10 would have been 1.68m. The last Minister made feeble excuse for justifying these payments.

Summary of savings 1.9m in 2012 and more in future years

Please note that bonuses paid for directors every two years up to 2010/11 may well see a reintroduction of their bonus on an annual basis.

Consultants
The use of consultants has grown out of all proportion. The company has 524 senior managers, so called experts in every single aspect of the company. Therefore an outside body in most cases should not be used. The amount of consultants (29) and the cost of 5.28m between April 2008 and February 2010 is further compounded by the use of another consultant equal approach formerly CHH Recruitment. This has also cost the company: 13

2007/08 852,798 2008/09 508,503 2009/10 702,050 A full list of consultants is as follows: Consultants engaged by Remploy since March 2008 Ability Net Technical Centre Ashutosh Khate A Smarter Splash Limited Barnett Waddingham Bond Bray Leino Ltd. C11 (Hampshire) Ltd. Carley Consult Ltd. Caruso Consulting Ltd. 7 April 2010 CIPD Enterprises Limited CITI Cognos/Ax Creation Interactive Deloitte MCS Limited Fleet Lifeline Ltd. Focus EAP Gareth Matthews Good Relations Wales Hay Group Management Limited Ian Blake IBM Impact Executives Infor Global Solutions Johnson Controls Limited 15 KPMG Lionel Zetter Mercuri Urval Limited M Linell Nine Feet Tall Northgate One To One Coaches Ltd. Penna plc Resilient Risk and Strategy Management Social Firms UK Ltd. Systems Consultants Services The Leadership Factor 2e2 Vistorm Ltd The cost of consultants shown in the written answer from Jonathan Shaw the then Minister does not complete the full cost of consultants. House of Commons, 7 April 2009 14

Written Answer Remploy: Consultants Caroline Flint: To ask the Secretary of State for Work and Pensions which consultants have been engaged by Remploy since March 2008; and what the cost of engaging them has been. [321719] Jonathan Shaw: A list of consultants that have been engaged by Remploy since March 2008 is provided in the following list. Total spending by Remploy on consultants between April 2008 and the end of February 2010 was 5.28 million. --------Prior to Mach 2008 the cost was around 4.2m for the previous 12 months. The story does not end here and the current situation could leave the directors open to an allegation of the misuse of public money. Also some employees could be consultants and not paid through the normal PAYE system. We would question how the HR Director, Sue Butcher is engaged and paid and how the job was advertised. The following people are listed in the company structures as consultants but are not on the list of companies given to the Minister in his answer to MP Caroline Flint. Consultants working internally for Remploy since March 2008: Rod Baker Rachel Mayer Will Winfield Richard Groves Mick Leahy Strategy Consultant Finance Consultant IS Consultant Learning Consultant Royal Mail Sales Consultant

We do not know what the full cost of engaging these consultants are but estimate that this would come to around 150,000 to 200,000 per year. We also understand that KPMG has now been engaged on work to do with the Remploy Pension Scheme which could cost as much as 1.3m per year. The trade unions proposals are that substantial savings can be made.

Summary of costs around 6m per year Summary of saving should be set at a target of 5m
Furthermore the DWP should ask why (and investigate) over 15m in the last 3 years has been wasted on consultants. It is because most of the 524 senior managers do not possess the skills to run the company and may be it has been used to pay high fees to people later to be given a job. In addition the 5 consultants listed if not on PAYE should be disengaged and their jobs reallocated. 15

Purchasing of Materials
In the 2008/09 accounts a massive figure of 87.627m was spent on the purchase of raw materials. In the 2007/08 accounts the company spent 91.794m. When you look at the figure of 130.744m for sales in 2008/09 the percentage of materials against sales was 67% compared with 2007/08 which was 149.232m. The raw materials were 91,794m which is just over 61% against sales. Over this period the cost of raw material increased by less than 2%. Either way the purchasing terms are 5% worse than the year before. 5% of 87.627m is 4.38m. The real problem is that no one in the company is set targets for purchasing. In 2001 the GMB introduced the company to one of the largest European timber companies with 6 manufacturing plants within the UK. At the same time the GMB introduced the company and its Building Products to Saint Gobain (Solaglas). Remploy started to purchase products from Solaglas and in doing so Remploy saved a considerable amount of money. In the case of the European timber supplier, the business mainly furniture decided not to work with the contacts that we had provided. We make this point and could make others that Remploys policy is to stick with a supplier without any apparent reason. An example is the Furniture Group. Our contacts could have supplied all of Remploys timber requirements. Most commercial furniture companies raw material purchase is around 30% to 40% of product; some 20% to 30% lower than Remploy. The purchasing of raw materials is absolutely crucial to Remploy making a decent profit on the products that they sell. It is very disappointing that the procurement of materials is low down Remploys list of priorities. The trade unions would set a modest target for the reduction of the cost of materials of 9% for 2009/10.

Summary of savings 7.886m based on the 2008/09 spend on materials

This is an area of savings that can be maintained and improved by hard work not by an indifferent attitude that is currently prevailing.

Employment at Remploy
It has been very noticeable over the last five years that a number of senior managers are working for other companies, or they sit on Government Quangos. One of the previous directors, Jill Hill fell into the latter category working for Remploy and sitting on 3 Quangos and also being paid by the company. 16

It was the trade unions who drew the Ministers attention to this and after numerous calls by the trade unions to stop this the directors hours and pay were cut to part time. The trade unions believe that all M1 and Ex Scales who have unstated hours should not be allowed second jobs or be allowed to run their own private business. No M1 or Ex Scale manager should be allowed to sit on any Government Quango or take a directorship outside or Remploy. The trade unions want to see senior managers and directors fully committed to Remploy.

One Remploy - Aims Manufacturing Enterprise Businesses & Employment Services; Separately Accountable, independent businesses yet cross linked to create a one stop shop for disabled people. Job shop (ES) Training + Life Long Learning (Factories) Long term & short term employment contracts Modern Apprenticeships / Development - Accountable - Responsible - Green; Ethical & Environmentally Friendly The showcase employer & champion for disabled people seeking employment, training, rehabilitation, support & assistance in getting and keeping a job
Summary of saving: Very high and senior managers will now have to concentrate on Remploy Working from Home
There has been a tendency since 2008 to employ senior managers from home. The trade unions believe this has nothing to do with equality issues or childcare issues. The trade unions believe and would propose that all home working is now reviewed without exception. The only employees who should be allowed to work from home are those people with issues on mobility and caring responsibilities. The trade unions believe that five days per week home working can lead to very short hours and inefficiency. This is not intended for those employees who are home based and travel to different parts of the company. We would expect them to 17

arrive home on a Thursday or Friday. Senior managers cannot operate from home effectively. The trade unions see a problem developing and wish to stop this before it does become an issue of cost.

Energy
For a long time the trade unions have been the advocate of a green environmentally friendly Remploy. The company has so far ignored our policy. Energy saving is not only good for the environment but it makes good business sense. Environmental issues and energy saving is high on the Governments agenda and energy saving devices such as solar power and recycling of materials are low on the Remploy agenda. The employees in the EB factory sites and ES branches have never been consulted over energy reduction. We have seen no new targets for the reduction of energy even though this was part of the trade unions submission to the company and Labour Government in 2008. Insulating windows and buildings have not taken place. Simple methods of having time switches on toilet lights have not been a priority. Closing down IT equipment left on standby for long periods must save energy and money. We know that in every factory lights are let on when areas of the factory are not in use. We have seen offices in EB and ES lit up like Christmas trees with no one in them. The trade unions propose that in each factory and office employees should be given the total cost of energy for the last 12 months and that premises sets an energy reduction target of 10%. Each factory and office should have an energy champion whose job it is to make proposals on the reduction of energy. All parts of Remploy should look around at what is not being used and draw up a list of material stock. This should be printed on the website each month and after 6 months the unwanted stock should be recycled into other social enterprises.

Summary of cost saving should be between 100,000 and 200,000 Expenses

We have no figures for expenses but we believe that around 900 employees make multiple claims each year and that around 800 of these people claim expenses on a weekly/monthly basis. The whole system is open to abuse with total reliance on a receipt system of claiming back expenses. 18

The trade unions proposals are to move to a fairer system of expenses which would include petrol cards and limits on the price of accommodation and meal costs. This is far reaching for a large number of our members but the company cannot continue to use public money for a small group of employees to make money out of expenses. Travel to and from meetings should be by the most efficient means. For those senior managers who travel outside of the UK the means of travel should be standard class and not business class and should be booked well in advance. UK train travel should be by standard class as per MPs etc using advanced savers etc when possible to keep costs down. The use of expensive restaurants should be discouraged and no more than a four star hotel should be used. The trade union proposals are that expenses across the company should come down by 20%.

Summary target of savings for a full year 200,000 to 400,000 Meeting Costs
The company has so far ignored the trade unions offer to help reduce the meeting costs by eliminating the use of hotels and high costs of business centres. The trade unions estimate that the full cost of meetings which include travel, overnight, meeting room and subsistence is now around 2m per year. There are no real agreements with hotels and the GMB and Unite have better accommodation arrangements than the company. For instance at the Days Hotel in Manchester the cost for bed and breakfast is around 52. Large meeting rooms in the nearby Mechanics Institute can be retained for as little as 100 to 300 per day. Shared travel in company cars can also reduce the cost. The trade unions have offered free meeting rooms which are available throughout the UK in most large City centre totally free of charge. The joint Consortium meetings with the company are now taking place in trade union offices including the use of the London office of the NUJ. Both Unite and GMB are willing to make facilities available. The practice of using five star hotels and travelling first class or on your own in a high fuel consumption car should come to an end. Meetings should be planned to eliminate overnights but also taking into account the disability of attendees. No matter where the meeting is, someone will probably have to stay overnight but reasonably priced hotels must be used.

Summary of savings in a full year 250,000

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Maintenance Costs
The cost of outside contracts is estimated by the trade unions to be in the region of 800,000 per year. This is made up of a number of outside contractors doing work such as electrical/structural and even down to general maintenance such as floor maintenance and window replacement. We understand the cost now includes the maintenance of machinery such as sewing machines and other plant. The trade unions proposals are to retrain a number of skilled people in both building and mechanical maintenance. We would also train small teams in decorating skills to reduce the cost of employing outside contractors in order to keep Remploy premises up to a decent standard. An additional saving would be made by these teams training unemployed people to become decorators.

Summary of target savings 100,000 Property, Leases and Rents

The company has continued throughout 2008 and right up to 2010 to sell its assets at knockdown prices. The trade unions are aware of the sale of York for 187,000 when it was previously valued at around 400,000. Industrial properties in York are at a premium with very few industrial properties on the market. New leases seem to be at a very high rate such as the Meridian Centre. The ES branches on the High Street are also very expensive and in some cases the local Remploy factory would have been much better and cheaper. The trade unions are very critical of the company regarding the portfolio of property and the way that the space is used. For example Coventry has reduced the size of its workforce dramatically and there is a large amount of area not being used in the factory. With a reorganisation of the work and storage areas the company could probably rent space for storage or open up a small manufacturing unit for new business. Local communities could be sold space for a wide variety of uses. The trade unions proposals are to set a target of savings by re-letting and reallocating space and by renegotiating leases.

Summary of savings in a full year of 500,000 to 1m

The trade unions also make a recommendation that the current Property Services Team of 7 should be cut to 3 people.

Summary of savings 200,000

The effects of new income could be around 500,000 to 1m in a full year. 20

Cars/Car Allowances/Petrol Allowances

The trade unions have raised this issue time after time and because of the self interest of individuals within senior management the car and car allowances are in a mess. To some degree ES has tried to reduce some cost by reducing the amount of cars and car allowances. A company car should only be provided to an employee who has the need to travel on a regular basis to conduct Remploy business outside of their normal base of work. Company cars should not be provided for those employees who only travel to and from their normal base of work. Company cars should be restricted to one type of car and should be of a model that is friendly to the environment, low on emissions and cost no more than 13,000. A new leave hire contact should be drawn up. At the moment company cars come in different models ranging from Audi 5 sporting models to 2.5 litre fuel devouring high action models. The company is funded by public money and the senior managers and directors should set an example. Hybrid cars are now commonplace. The GMB car fleet is now 90% Hybrid which amounts to over 300 cars. Substantial savings have been made within GMB. The trade unions proposal is to have a fleet of company cars that would meet todays low emission standard; be subject to a price limit of 13,000 and that the user must fulfil strict criteria for use. A natural reduction in maintenance costs will follow. Currently the company cars range from 25,000 to 33,000.

Summary of savings 1.6m Car Allowances

The company car allowance again seems to be a benefit to mostly non disabled employees who have the status of M1 or Ex Scales. The policy needs to be reviewed and we understand that there are a large number of employees that should not be in receipt of the allowance. Again strict criteria need to be agreed with the trade unions. Car allowances should be limited to 3300 per year.

Summary of target savings 50,000

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Petrol Allowances
Both company car and personal use should be reviewed. The AA set standards and most company agreements are a few pence per litre above. We believe that a comprehensive review should take place in the case of company cars or hire cars a low fuelled car should be used. The use of your own car is more complicated. However the current system is slap dash, over generous and may be breaking Inland Revenue rules.

Summary of target savings 40,000 Inhouse Sales

There is a total lack of vision within Remploy regarding sales. The company has not idea how to generate extra sales and revenues. Feeble attempts are being made at Ashington with little or no help from the company. Ashington has started to produce garden furniture and sales could be increased by selling internally. Schreiber Furniture in the 1970s and 1980s has an employee buy and pay later scheme which has a turnover at todays prices of 10m. Of course it does take hard work and some imagination but it can be done. The trade unions proposals are for the development of an Employee Sales Scheme (ESS). The company produces a range of products that could be sold to their own employees. Beds, bedroom furniture could be sold to their own workforce and their families and friends. With over 3000 employees a scheme could be introduced where interest free credit could be given with say a 12 month payback system direct from the employees salary. Other products could be developed and sold directly.

Summary of target income in first year 400,000 NEW SALES

Internal sales to all employees Site showrooms/ catalogues/ flyers Web sales new websites/ Ebay etc Sales to local authorities Sales to government departments Sales to trade unions Sales to charity organisations Development of fair trade & Remploy ethical trade mark Build upon the existing successful Remploy products, markets & reputation 22

Ethical Trade Mark & Branding The Remploy Manufacturing Trade Mark will be developed to ensure customers that Remploy products are Ethically Produced and sourced throughout the Supply Chain. It will show that the products are: Manufactured in as environmentally friendly way as possible Produced by disabled workers in the UK Of the highest quality Manufactured with the human rights of other workers in the Remploy Supply Chain in mind.

Development Strategy Growth Opportunities.

Government to support their desire/objective to move work out of Government Departments and into Public Procurement Contracts -Remploy is a not for profit contractor with previous civil service spend being used to employ disabled people who would otherwise be benefit reliant - Will to achieve politically acceptable manpower reduction for Government and social/economic objectives for Government Engage with young people with Disabilities- trainees; apprenticeships; work tasters and work experience (NEETS) Develop commercial business propositions and products/services based on pursuing ethical , fair trade and green market segments including recycling. - Partner and/or sell products and services to socially responsible Companies who want to show their support for disabled people in work - Will to provide substantially improved margin and a better platform to show worth of disabled people in work Links with JC+ and Access to Work

Demonstrating the Social Worth of Remploy

The will to do more to relate Remploy to the communities we operate in - The will to engage with disability groups in the community The Will to engage with Charity Organisations - The will to engage more with BASE - The will to use factory base to link with communities - The will to develop Learning Opportunities in Remploy for all disabled people on benefit in the community - The will to set targets for promotion of disabled employees inside Remploy into Management

REMPLOY LEARNING, TRAINING & DEVELOPMENT

The new Remploy will have structures in place to bring the best out of its employees which will in turn help the businesses to grow 23

Enable & empower our own people to become trainers will ensure the smooth running within factories when key workers are otherwise engaged. Provide training for the purposes of developing the workforce and the businesses. Modern Apprenticeships, personal development of employees and on the job training. Supply training to local industries, local organisations. Trainees Training for industry Our factories can provide Work Tasters for disabled people coming from benefits into work. Where better to get used to the work ethos than in Remploy Factories? As our business grows, we need to find people who express a preference to working in a factory rather than them being pushed into any job. CHOICE! The new Remploy will use initiatives to pass on learning and training facilities to external partners. -The mini Asda at Remploy Burnley was a venture that could have variations we could use. As well as supermarkets we could have bedrooms for training of hotel staff and the possibilities are endless in this trade. Other initiatives will be utilised to facilitate training and development such as; The Kitchen set up at the Remploy factory in Mansfield to assist people in life skills. The use of washing machines, microwaves, tumble dryers, and cooking skills gave people the opportunity to develop domestic skills that would improve their self esteem and quality of life. Centres of Excellence for lifelong Learning Remploy Learning, Training, & Development evolved from the ULF funded project and the partnership between the Trade Unions & the Company. All Remploy Factories now have Learning centres which can generate income when our learners are not using them. The new Remploy Manufacturing Arm would maintain the core principals and continue to offer numeracy and literacy as life skills, while recognising the needs of those who are ready to progress along the learning trail, our centres are disability friendly & are equipped with adaptive technology. Courses to encourage the use of IT will be a benefit to the new regime as the use of technology becomes a greater part of every working day in Remploy Manufacturing. Learn Direct, ECDL and other IT courses can be offered. PUBLIC PROCUREMENT: Supported Factories and Businesses The Governments procurement policy is that ALL public procurement of goods and services is to be based on value for money. Value for money is defined as the optimum combination of whole life cost and quality to meet the user requirement 24

By indicating in the EU advert (the OJEU notice) that this contract is reserved for sheltered workshops under Article 19 of the Directive we are stating that only organisations with more than 50% disabled employees (from anywhere within the EU) can bid for this work. Supported factories and businesses can provide a wide range of goods and services. Contracting authorities should aim to have at least one contract with a supported factory or supported business. This may be for a niche product or service not provided by existing major contracts. In addition, main contractors should be encouraged to use supported employment organisations as sub-contractors on public sector (and other) contracts. Removing Barriers In addition to reserving contracts, contracting authorities should ensure that there are no barriers to the participation of supported factories and businesses in procurement exercises more generally, in competition with other suppliers and service providers. CONCLUSIONS The Government needs Remploy -Investment in a Core business manufacturing strategy which is professionally & commercially ran on a not for profit basis, exploring & taking advantage of all opportunities in Public Procurement, Environmental, Ethical products, as well as existing traditional markets Remploy should be allowed to lead by example and be the showcase Employer & champion for disabled people seeking employment, training, development, rehabilitation, support & assistance to getting & keeping a job. Unleashed potential & Full use of Factories with Savings of 37 Million (against current spend). New sales income of 45 million from exploiting Public procurement, learning & training, ethical markets. This will show the true cost of Subsidy per Capita of 12,000 & not the artificial inflated cost as is quoted now (25,000) One Board, looking inwards at Remploys existing businesses markets & study the public sector market where can Remploy fit into this market? i.e. What is Remploys role in the British Textile market what is its niche? What is the services market in the UK and what elements will Remploy attack? This will: 1) Provide Employment, Training & Skills development 2) Generate income so subsidy is reduced per person, allowing more people to be employed & assisted. 3) Provide real working environments for young disabled/ disadvantaged people 4) Allow skills training for communities 5) Allow benefit claimants real work tasters and opportunities in an understanding; supported environment

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A ONE STOP SHOP FOR DISABLED PEOPLE

Training Learning Development

Apprentices ENTERPRISE ENTERPRISE BUSINESSES BUSINESSES

Trainees

Remploy Factories

EMPLOYMENT EMPLOYMENT SERVICES SERVICES

Career aspirations

Open Employment

Rehabilitation

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