the blueprint interview: David Freud
‘I think it’s
important there’s
continuity ’
David Freud – soon to be Lord Freud – a former
banker whose life has been full of colour and controversy,
now has one of the most sobering jobs in politics. He’s trying
to figure out how best the Flexible New Deal can be made
to work as thousands more join the dole queue every month
Will the Flexible New Deal (FND) be able
to cope with the recession?
Anticipated costs have increased sharply – I’ve
heard figures of up to £2.5 billion. Many more
people will be going through FND.
However, I’d have thought that private contractor
bidders will feel less constrained than they once did
by the Department of Work and Pensions’ suggested
target of getting 55 per cent of people into jobs.
That was a concern that was pretty stretching.
I understand the fixed rate proportion of payment
to contractors has gone up from 20 to 40 per cent,
so there have been adjustments for a much
tougher environment.
What can be done to prevent ‘revolving
door employment’ – private contractors
placing people in short-term jobs for which
they may not be suited?
One thing I wrote in my report is that the outcome
required by the government should be to give
people a sustained position in the world of work for
three years.
Currently under FND, contractors will get a
payment for people who make it to 26 weeks.
I think we need to make that longer as soon as we
can. If it’s three years, you have to rethink your
whole business.
You’re talking about a mentoring process for
people and a development model. It’s more
8 blueprint summer 2009
expensive and people have to be up for it. We don’t
want to shift people into unsatisfactory jobs – we
want to turn their lives around.
What has been the contractors’ reaction
to this idea – and what would it mean for
their businesses?
I haven’t heard anything concrete from the sector,
mainly because I don’t think anyone knows what
would happen. My main concern is that if it creeps
up from six to nine to 12 months, contractors may
simply use existing systems rather than rethink the
business model from the outset.
Sustainability is the key requirement. You could
almost pay contractors by the month when people
are in work – it would be a big incentive to keep
people in a job.
But I think just getting them into work and no
more is basically naïve, and a long way removed
from how people behave. It can’t be beyond the wit
of man to organise the sustainability agenda and get
it right.
Do you stand by your view that some
disabled people could do more to find work?
The point I made in my report was that we still have
a system that traps people. It’s very hard to get back
into the world of work once you’re on Invalidity David Freud believes that
people should be given a
Benefit (IB) – the system makes it extremely risky to sustained position in the
come off it. But it’s been re-designed and we’re world of work for three years.
 It can’t be
beyond the wit of
man to organise the
sustainability agenda
and get it right

blueprint summer 2009 9

the blueprint interview: David Freud
moving from IB to employment support allowance.
If you have a disability, you can still be in the
employment category.
Does it cost more to get the disabled into
jobs? If so, what will be the incentives for
private contractors?
It’s a challenge and one that means we have to think
carefully about the pricing mechanism. Trials of
the ‘invest to save’ model are scheduled to start in
spring 2011, and one of the most important things
to learn is the different cost of getting various
people back into work.
Looking long-term, I’m sure we’ll need
differentiated prices under one formula or another,
so contractors don’t ignore people who are harder
to place.
Why did you ‘swap sides’ and move from
government advisor to the Conservatives?
My political switch isn’t as big as has been made
out. I’d never been a member of any political
party until now. The idea was that I’d be an
advisor to James Purnell for a year. I started in
January 2008, and when the government put out
the White Paper, the primary purpose of my work
was completed.
Then I was offered the job of front bench
spokesman. If I wanted my reforms locked in,
the best way was to be in the next government
and responsible – and I felt it likely that the
Conservatives would win the next election. They
offered me the chance to get off the pot and do it.
Contractors should not
ignore people who may
be harder to place in work.
10 blueprint summer 2009
PROFILE
NAME: David Freud
AGE: 59
EDUCATION: Whitgift School, Croydon, and Merton
College, Oxford
CURRENT ROLE: Nominated Conservative front bench
spokesman in the Lords on Welfare Reform (February 2009)
JOB HISTORY:
l Government advisor on welfare reform after the
publication of his report ‘Reducing Dependency, Increasing
Opportunity’ on the Welfare to Work system (January
2008-February 2009)
l CEO of The Portland Trust (2005-2008). He remains a
trustee and director of the not-for-profit foundation, which
aims to encourage peace and stability between Israelis and
Palestinians through economic means
l Vice Chairman of investment banking for UBS and global
head of transport/leisure/business services, retiring in 2003
l Journalist at the Financial Times
What innovations will you try to bring in?
The broad outline of approach to welfare reform is
agreed in principle across the parties. What hasn’t
been done is work on handling the immediate crisis.
One thing we need to do for people who don’t
We need have a job, and who aren’t in good shape, is help
to stop them falling into depression. And we must
to keep people have systems to stop them falling out of the labour
sharp and market long term.
We need to keep people sharp and work
work out out programmes to do that. But those mustn’t
programmes undermine the long-term objectives. You have
to bring everything together – you don’t want
to do that different structures overlapping at random. That’s
the challenge.
What’s your focus at the moment?
I haven’t yet been made a peer – I need to go
through the vetting process. But I’m already in
harness and working with Theresa May’s (Shadow
Work and Pensions Secretary) team.
The first thing is to think about the recession.
My bit is to worry about the casualties and
how we can reduce the impact – I don’t have to
persuade anyone of that. I hope the government
is worrying about that too, and that we can inherit
something useful.
Given your knowledge of the challenges,
how important it is that you have a good
crack at the job?
I’d hope not to be moved on quickly. I’ve worked for
three secretaries of state and four junior ministers
for welfare reform – I represent more continuity in
the department than anyone. I think it’s important
there’s continuity.
We need to plod along and get the basic things
right and be consistent. It can be very complicated
and technical, as well as boring.
I’d hope to get the job of welfare reform minister
and slog it through. From going into government
next year, it will take another three or four years.