Whatever the arguments for or against the closure of 36 factories run by the company Remploy, with the loss of more than 1700 jobs for disabled people, the timing could scarcely have been worse.

The bitterly-opposed Welfare Reform Act, passed last week in the teeth of opposition from the House of Lords, has already left the Coalition Government facing unprecedented anger among disabled people and the groups that represent them. The latest decision appears to confirm fears from the unions that a report in June last year was a death knell for the company. The Sayce Review concluded that the UK Government should stop funding Remploy and subsidising unprofitable factories.

Those which are to close, including four in Scotland which employ 111 people between them, have since been judged non-viable. Five more north of the Border – and another 174 jobs – remain at risk, as the company considers whether they can be made profitable.

The argument for closure is that many of the factories run by the company, which has been providing employment opportunities for disabled people for more than six decades, are heavily dependent on government subsidy.

The figures are disputed. The Government says every disabled employee is subsidised to the tune of £25,000. Many of the company's factories are outdated and employ relatively small numbers. The subsidy could be better spent by directing people into schemes which would help them gain mainstream work in the private or public sector.

Unions say the £25,000 figure has been calculated to mislead and managers have been inept, running furniture businesses which barely market themselves or textiles firms which will not invest to deliver what the market wants. Attempts to secure more public-sector contracts appear to have been equally half-baked. The Labour Party is right to highlight broken pre-election reassurances by employment minister Chris Grayling that a Conservative Government would work to identify additional opportunities for Remploy workers.

It is true that for many disabled people the idea of working with other disabled people in a factory is not welcomed. Segregated labour seems old-fashioned and far from ideal. The Government says its funding will be better used to support more disabled people into mainstream employment, rather than funding Remploy.

But the arguments would seem far more convincing if disabled people thrown out of work in some of the employment blackspots where many Remploy factories operated could be confident that they will find new jobs.

More funding is to be provided for Access to Work schemes, ministers claim. But is it really plausible in the current climate that this will be successful?

The fear for those who look set to lose their jobs is that they find themselves out of work, with further opportunities strictly limited, at a time when unemployment is soaring and competition is stiff.

Meanwhile they may well find themselves claiming benefits and facing tests, which on past performance may well tell many of them they no longer qualify as disabled at all.