Portillo faces disabled subsidy climbdown

THE GOVERNMENT appeared last night to be preparing for an embarrassing climbdown over its decision to scrap a scheme to help thousands of disabled people in sheltered workshops.

On a day which saw European Commission officials savage the decision to abandon the Priority Suppliers Scheme, Philip Oppenheim, Under-Secretary for Employment, said his department was now 'seeking confirmation' from the commission that an EC supplies directive which Michael Portillo cited as the cause of the scheme being scrapped does not, in fact, affect the supported workshops.

That conflicted with 'firm legal advice' from government lawyers, Mr Oppenheim said. But amid signs of confusion and retreat within his department, he added that whatever the outcome of talks with the commission 'we remain totally committed to helping people with disabilities'. He went on: 'We will do our utmost to safeguard the position of those who may be affected.'

A meeting had been arranged with Remploy, the company chiefly affected, for next Wednesday to see how continuing employment can be supported, Mr Oppenheim said, although the Government could not isolate it entirely from competition.

Preparations for retreat came as a senior commission official reportedly described the Secretary of State's stance as 'not only a travesty of the truth but quite the opposite of our view'.

Effectively accusing Mr Portillo of bad faith, if not of fabrication, a commission official said: 'This directive was never intended to make any government abandon special schemes in favour of the disabled.' Far from the commission wanting it scrapped, 'commission policy is to support this and any other disabled scheme'. No other government had experienced difficulties with the directive, the official added, and the British government had not approached the commission over it.

Commission officials believe Mr Portillo is using the issue to pick a fight and use the EU as a scapegoat, but yesterday some Tory MPs joined Labour and the Liberal Democrats in attacking the decision to abandon the scheme.

Terry Dicks, a right-winger but campaigner for the disabled, said: 'I am surprised that Mr Portillo of all people should have accepted this without a fight.' The Hayes and Harlington MP said he would be writing to Mr Portillo seeking a full explanation.

Tony Lloyd, Labour's training spokesman, said Mr Portillo 'must explain why his department has put the jobs of thousands of disabled people at risk with this apparently needless decision'. He went on: 'Unless some new justification for this action can be produced, it must be assumed that the decision was taken purely on ideological grounds, simply to strengthen Mr Portillo's support among extreme right-wing Conservative MPs.'

Tony Withey, chief executive of Remploy, which employs 8,700 disabled people in 95 factories, said loss of the priority scheme combined with competition from cheap overseas labour would have considerable impact on the firm.