The Department of Work and Pensions announced the Remploy site in South Gyle was set to close with the loss of all 28 jobs after no offer was received to take it over.
Earlier this year Remploy announced 36 of its 54 factories across the UK, which have provided employment for disabled people since the Second World War, were at risk of closure following the withdrawal of government funding.
But hopes of a rescue for the Edinburgh factory were raised when the government said in July that it was one of nine sites where there had been interest from an outside bidder in taking it over.
However, in a letter to MSPs yesterday, the UK Minister for Disabled People Esther McVey said no final offer had been received for the Edinburgh factory.
She said in the absence of viable plans, Remploy would now move to close the site and begin individual consultation with employees over redundancy.
Lothians Labour MSP Sarah Boyack said:
“This announcement is a devastating blow for workers and their families who have campaigned tirelessly to save Edinburgh Remploy.
The coalition government talks about supporting disabled people to work but their actions expose their hypocrisy. These proposals will simply isolate individuals and condemn them to life on benefits. That will not help our economy to grow.
Throughout this process, the coalition has treated Remploy workers with contempt, keeping them in the dark over prospective â€¨bidders and undermining their terms and conditions.
Edinburgh’s Remploy workers have been given false hope only to have it snatched way – they deserve better.”
Ms Boyack said in the wake of the Blindcraft closure last year, the Scottish Government should now redouble its efforts to provide opportunities for people with disabilities who want to work.
Colin Keir, SNP MSP for Edinburgh Western, said:
“This is a kick in the teeth for everyone who has campaigned to save the factory here in Edinburgh.
The fight will not stop here and I intend to lobby the UK Government further, in the hope that they see sense and reverse this decision.”
The DWP said it planned to use the £320 million budget for disability employment “to support more disabled people into mainstream jobs instead of loss-making â€¨segregated factories”.
A spokesperson said:
“We have put in place an £8m package of employment support for those affected, including a personal case worker to help individuals with their future choices.”
The Edinburgh factory carried out work like document management and scanning, which includes the archiving of files to electronic format. It also assembled electronic products and undertook packaging work.
Remploy employed around 2600 severely disabled people and 800 non-disabled across the UK.
In Scotland, there are nine factories with around 380 severely disabled and 80 non-disabled workers. The firm was established in 1946 to provide work for disabled ex-service personnel.