Does every Remploy place cost £25,000?

"Despite significant investment in those businesses, the cost of each employment place remains some £25,000 per year [at Remploy], compared with an average Access to Work award of just under £3,000."

Maria Miller MP, House of Commons, 7 March 2012

The Government announced yesterday that it intended to reduce the funding for Remploy, resulting in the subsequent closure of 36 of its factories across the UK.

Remploy is a publicly-owned company providing employment to disabled people. The Sayce Report, published in June 2011, heavily criticised the company. Instead it recommended an expansion of the Access to Work scheme, which provides additional funds to help private businesses recruit more disabled people.

Announcing its response to the Sayce Report, Disability Minister Maria Miller argued that Remploy currently ran at a disproportionate cost, with each place costing £25,000 compared with the £3,000 cost of each Access to Work grant.

Analysis

In both instances, the cost per place is calculated by dividing the total cost of the scheme by the number of people for whom it found employment. It could be argued that this approach is problematic, as it will be influenced by factors such as the relative infrastructure costs, as well as the money going directly towards employing people.

Nevertheless, this method has been used by the Department for Work and Pensions to calculate the cost per person of each scheme. According to the DWP's figures for 2010/11, the cost per disabled employee at Remploy was £25,000 — below the performance and resource agreement target for that year, but above the £24,000 target set for 2011/12.

Similarly, the DWP regional figures for the use and cost of the Access to Work scheme can be used to calculate the cost per person. The total spend for the Access to Work scheme in 2010/11 was £105,439,000 while it reached around 36,000 people, giving an average cost per person of approximately £2,900.

However when we tried to scratch the surface of these calculations we ran into trouble.

The DWP data lists the £25,000 figure as the "cost per disabled employee." According to Remploy's annual report, the company employed an average of 5,217 staff in each month of 2011, and received £116.8 million in Government grant-in-aid.

However the annual report also notes that "in addition [to the 5,217 staff] the Company found 20,079 jobs in mainstream employment for disabled people and those experiencing complex barriers to work."

Whether or not these people have been included in the DWP's calculation will obviously have a large impact on the figures produced, and given that this method of helping disabled people into jobs is similar to that used in the Access to Work scheme, it may merit including in any comparison of the relative success of each.

We therefore got in touch with the DWP to ask for further details of their calculations, however unfortunately they haven't yet been able to provide us with them.

Conclusion

The £25,000 cited by Ms Miller as the annual cost of a Remploy job appears to be correct, according to the published DWP statistics. However, the method used to calculate the cost per place isn't clear, so we don't yet know how comparable it is to the £2,900 given for the Access to Work scheme. The DWP needs to clarify this, and we will update as soon as we have a response to our query.

Aside from this, we should also point out that dividing the total government subsidy for each scheme by the number of employees might be a rather crude measure of the 'cost per employment place', as it doesn't account for the different infrastructure costs and asset values that each model is likely to accrue.

Similarly, the comparison might not account for any differences in the circumstances of those employed through them, and we cannot know if those whose jobs are at risk at Remploy would necessarily find work for a £2,900 government outlay under the Access to Work programme.

So while the figures are readily accessible on each side of Ms Miller's ledger, some context and clarification may be necessary before we can have full confidence in it.