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The disposal of Remploy’s businesses

Remploy, the provider of employment and services for disabled people, and the Department for Work & Pensions completed the disposal of Remploy factories within a tight timetable and below budget, according to a report today from the National Audit Office.

Remploy Enterprise Businesses employed 2,150 disabled people across 54 factories in 2011-12. That year, the 12 businesses made an operating loss of £49 million and received £53 million in government subsidies. Between August 2012 and December 2013, Remploy disposed of its factories, either selling them as entire businesses or closing them down and selling sites and machinery.

The spending watchdog finds that, in some cases, Remploy was restricted by previous contractual arrangements in designing the sales process, and it could have improved communication and support for bidders. But overall, Remploy appeared to respond proportionately to these constraints. The likelihood of selling more than a minority of the factories was always small, and the Department and Remploy had to balance the need to protect public money and employees’ jobs.

Remploy tried to sell loss-making factories and preserve jobs even though the likelihood of sale was small. By January 2014, it had safeguarded jobs for 442 of its employees.

Today’s report, based on a risk-based investigation, finds that the costs of disposing the factories are likely to be less than expected. The Business Case for the disposal of Remploy businesses estimated the total cost of the programme to be £108.8 million. The DWP estimates that actual costs will be about £100 million, including £63 million in redundancy payments and £8 million in additional support for former employees. Sales have so far raised £12 million and Remploy expects this will reach £19 million.

Notes for Editors

  1. In today’s report, the NAO has not assessed the decision to dispose of Remploy factories.
  2. Remploy is a non-departmental public body of the Department for Work & Pensions and a public corporation. It operates as a commercial company and is funded by revenue generated from its commercial activities and government grants.
  3. In June 2011, an independent review concluded that Remploy factories represented poor value for money compared with other forms of support for disabled people. The review recommended Remploy close factories that could not operate without government subsidies. In March 2012, the Department announced it would withdraw subsidies to Remploy’s factories. Remploy has not disposed of Remploy Employment Services.
  4. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained by using the relevant links on our website.
  5. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.

PN: 25/14