The jobs of over 1,700 disabled people have been put at risk after ministers said that Remploy, the government-funded agency charged with helping disabled people find employment, would close most of its UK factories.

Maria Miller, the disability minister, announced in a written statement that the company would be wound up, leading to the closure of 36 out of 54 factories, which provide employment for disabled people.

The move comes after a public consultation, which Ms Miller said found “overwhelming consensus …that resources for supporting disabled people into employment should be focused on disabled people themselves”.

Liz Sayce, chief executive of Disability Rights UK, who led the consultation, recommended that the £25,000 average subsidy per job would be better spent on other services for disabled people. Ms Miller promised the £320m budget for disability employment would be protected.

Downing Street said: “What we are doing here is protecting the budget for specialist disability employment services, but trying to spend that money much more effectively than we have in the past.”

Unions were quick to condemn the move however. Len McCluskey, general secretary of the Unite union, said: “This is a barbaric decision. The government has sunk to a new low by sacking over 1,000 disabled workers.”

Phil Davies, national officer of the GMB union, called the decision “one of the worst this discredited government has taken since coming to office”.

Labour forced Ms Miller to justify the decision to the comments after Liam Byrne, the shadow work and pensions secretary, accused the government of “sneaking out” the decision in a written statement.

The 36 factories will be closed by March 31 after being declared “not financially viable”. They employ a total 1,752 people including 1,518 people with disabilities.

The other 18 factories, described as “potentially viable”, will receive a reduced subsidy while ministers try to find willing buyers. In March 2008, the Labour government closed 29 Remploy factories in a previous attempt to modernise the agency.

Ms Miller also announced an £8m fund to help support those disabled people who lost their jobs for 18 months, roughly half of which would be made available in personal budgets set at an average level of £2,500.

Separately, ministers will provide an extra £15m over three years for the £100m Access to Work scheme, which helps disabled people find jobs by supplying them with adapted technology, transport to work and communicators for job interviews.

Ms Miller said the £15m, combined with “other efficiencies”, would help a further 8,000 people into work or to retain an existing job.

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