A New Strategy for the Employment of Disabled People

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 JJJaJaaannnnuuuuaaaarrrryyyy 22202000111111 INDEX Page Summary of Cost Saving 1 Introduction 2 Executive Board Members in 2008/2009 3 Non Executive Board Members 5 Overtime Working 6 Remploy Senior Managers 7 Senior Managers – EB, ES, Grade M1, X Scales 7 Communications Department 9 Remploy Boards and Committees 10 ES – Senior Management Structures 11 Bonus Payments – Senior Managers and Directors 13 Consultants 14 Purchasing of Materials 17 Employment at Remploy 18 Working from Home 19 Energy 20 Expenses 21 Meetings Costs 22 Maintenance Costs 23 Property, Leases and Rents 24 Car/Car Allowances/Petrol Allowances 25 Car Allowances 25 Petrol Allowances 26 Inhouse Sales 27 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 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 1 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 IT Equipment 6 Cars 7 High leases and rents 2 8 Outside contractors 9 Procurement purchasing 10 Premises 11 Energy 12 Meeting costs 13 Expenses 14 Work from home 15 Private healthcare 16 Reduce number of businesses to just 2 17 Inhouse sales 18 Reduce maintenance costs 19 Further reduce overtime costs 20 Employment at Remploy Executive Board Members in 2008/2009 There were 4 Executives plus the Company Secretary, Guy Phillips but it is not clear how the four other Directors fit in, they are Alan Hill, Beth Carruthers, Alison Eldridge 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 businesses and 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 there own 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 the 2009/10 accounts. All the usual benefits according to the 2008/09 accounts and the cost of the Executive Board members were as follows: T Matthews part year including benefits £95,100 part year R Warner part year including benefits £110,200 part year N Hopkins full year including benefits and bonus £124,900 J Hill first few months of 2009 including benefits £8,700 part year A Jessopp few months including benefits £34,400 part year S Butcher estimate of salary including benefits £110,000 part year Add to this the cost of the pension scheme £36,500 Company Secretary, Guy Phillips (estimate) £120,000 full year 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. 3 The other additional costs are expenses and overnight accommodation for all the directors which is around £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 four other employees with director status: Alan Hill – EB Director £98,000 + benefits Beth Carruthers – ES Director £98,000 + benefits Alison Eldridge – EB HR Director £74,000 + benefits Jean Cabena – ES HR Director £74,000 + benefits We understand that the company pension contributions for these four ‘Directors’ is around £30,000 The summary based on 2008/09 costs (see notes on directors) Directors’ salary – Total (see notes on directors) Total salary for 2009/2010 Salary Bonus Benefits Total £ £ £ £ Tim Matthews 138,000 10,000 12,000 218,000 Sue Butcher 128,000 10,000 11,000 217,000 Nigel Hopkins 120,000 10,000 12,500 188,500 Beth Carruthers 102,000 10,000 11,000 154,000 Alan Hill 102,000 10,000 11,000 150,000 Jean Cabena 78,000 10,000 11,000 150,000 Alison Eldridge 78,000 10,000 11,000 150,000 Guy Phillips 85,000 10,000 12,000 188,000 (Company Sec) Totals 940,000 388,000 91,500 1,415,500 Please note the company has not shared the 2009/10 accounts with the trade unions. This normally takes place in June/July each year so 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. 4 Non Executive Board Members The accounts for 2008/09 shows that there are 8 non executive board members. The salary in a full year for 8 board members would be around £62,400. This is not the full cost of having non executive board members. 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.

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