A4e Interview David Freud

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

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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 Benefit (IB) – the system makes it extremely risky to come off it. But it’s been re-designed and we’re

David Freud believes that people should be given a sustained position in the 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

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the blueprint interview: David Freud

PROFILE 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.

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?

We need to keep people sharp and work out programmes to do that

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 have a job, and who aren’t in good shape, is help to stop them falling into depression. And we must have systems to stop them falling out of the labour market long term. We need to keep people sharp and work out programmes to do that. But those mustn’t undermine the long-term objectives. You have to bring everything together – you don’t want 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?

Contractors should not ignore people who may be harder to place in work.

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blueprint summer 2009

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.