David Freud, Baron Freud
David Anthony Freud, Baron Freud (born 24 June 1950) is a British journalist, businessman, Conservative politician and welfare adviser and is a Parliamentary Under Secretary of State for Work and Pensions. He is a great grandson of Sigmund Freud, and son of Annette Krarup and Walter Freud. Freud's book describing his career in the city has been described as "morally ambiguous". Whilst working in the City of London he was called by a colleague the "Fraud Squad" because of his ability to "heavily promote new share issues that subsequently tanked."
Though having no previous experience in the welfare sector he was asked by Tony Blair to provide a review of these services. The "Freud Report" and his subsequent parliamentary career have greatly influenced government policy on the provision of welfare services. In the aftermath of the financial crisis of 2008 his policies have been described as "making the poor pay for the risk-taking of the rich."
Life and career
Freud was first employed by the Financial Times as a journalist, writing the Lex column over a period of four years. In 1983 he was hired by the firm then known as Rowe & Pitman. Freud admits that this job which involved "writing research on companies at the same time as taking money from them for advice" would be considered illegal today. This type of conflict of interest was outlawed only after the dotcom boom when analysts were being found to have publicly backed clients while privately trashing them.
He worked on more than 50 deals, raising more than £50bn in 19 countries. Many were high profile, including the flotations of Eurotunnel and EuroDisney, while he orchestrated the rescue of the Channel Tunnel railway link and National Air Traffic Services. His role in the deals earned him a great deal of publicity and occasionally criticism. His rescue plan for the Channel tunnel rail link was subsequently lambasted for using "inaccurate and optimistic" figures by MPs. He described the sector in which he worked as a "pioneering, piratical industry where we made up the rules". He admitted to feeling "equivocal" about Eurotunnel and Euro Disney deals, where investors lost millions of pounds and acknowledges "Both of those were bad deals". The Daily Telegraph observed that Freud's Euro Disney financial plans "went so goofy they almost wrecked his career".
By the late 1990s Freud was becoming increasingly concerned about how he was being perceived by associates: "I felt like Beowulf saying to those who turned against him, 'Didn't I feed you enough gold?'" He was of the opinion that "If the rest of the country knew what we were being paid, there would be tumbrels on the street and heads carried around on pikes."
By 2003, Freud had become the vice-chairman of investing banking at the firm, now known as UBS AG. He retired early at the age of 53, claiming that he was bored with the City. "I spent most of my time firing people," following the downturn of stock markets at the turn of the century. Between 2005–2008 Freud was chief executive of the Portland Trust, which aims "to promote the peace process" in Palestine and Israel using economic measures.
One reviewer of Freud's book on his City career wrote that he "will be remembered in the City as one of the key players in several of the most embarrassing and badly managed deals in investment banking history".
In late 2006, Freud was appointed by the then Prime Minister, Tony Blair, to provide a nominally independent review of the British welfare to work system. Freud acknowledged that he "didn't know anything about welfare at all". Despite the great complexity of the welfare system Freud came up with a draft plan for reform within three weeks of his appointment. His subsequent recommendations called for expanded private sector involvement in the welfare system, for substantial resources to be found to help those on Incapacity Benefit back into "economic activity" and for single parents to be required to take paid employment earlier. Although his recommendations on single parents were immediately adopted, when Gordon Brown became Prime Minister in June 2007 other restructuring measures that involved paying private contractors thousands of pounds for processing long term unemployed people ("we can pay masses") were initially rejected but later implemented. He himself acknowledged there was no evidence that such schemes worked better than using the existing Job Centre resources.
Dominic Lawson commented on Freud's appointment as welfare advisor:
- “Perhaps David Freud’s greatest respray job was the stock market flotation of Eurotunnel. Not only did he come up with a clever way to make shares in Eurotunnel plc seem more than a wing-and-a-prayer speculation, he managed to flog the stock at the height of the stock market crash of 1987, even if it did involve getting Bob Maxwell to stuff a couple of his tame pension funds with the stuff... With such a reputation for finding gold in a mound of silage, it was not particularly surprising that John Hutton, the Work and Pension Secretary, should turn to this particular ex-banker when ordered by Tony Blair to come up with something snappy on welfare reform for the prime ministerial legacy.”
He was later rehired as an adviser to the government when James Purnell was appointed Secretary of State for Work and Pensions in 2008. He was involved in producing a white paper, published in December 2008, which would require most people receiving benefits either to participate in some form of employment or prepare formally to find paid employment later. "We cannot have people simply loafing about, doing nothing and expecting the state to finance their lifestyles," he said in comments to the white paper in question. "That is the way to the destruction of our society." Freud's vision of welfare reform would involve the removal of welfare benefits paid purely on the basis of need. In future people such as those receiving incapacity benefits would be forced to agree to a plan to enter employment or be subject to sanctions. In 2013 Work Capability Assessments for disabled welfare claimants were described by Peter Beresford OBE, Professor of Social Policy at Brunel University, as "reminiscent of the medical tribunals that returned shell shocked and badly wounded soldiers to duty in the first world war or the 'KV-machine', the medical commission the Nazis used in the second world war to play down wounds so that soldiers could be reclassified 'fit for the Eastern front'."
In February 2009, Freud joined the Conservative Party, which at that time was not in government. On 27 June 2009 he was created a life peer as Baron Freud, of Eastry in the county of Kent, and became a shadow minister for welfare in the House of Lords.
In October 2010 a number of church groups and organisations complained to the Prime Minister David Cameron about Freud and chancellor George Osborne's "misrepresentation" and "exaggeration" of fraud in welfare claims that had the effect of stigmatising the poorest and most vulnerable in society. In reply Freud stated that he was satisfied that his and Osborne's errors were "entirely inadvertent".
As of 2012, Freud is in charge of reform of the benefits system.
In April 2013, hundreds of anti-cuts activists delivered an "eviction notice" to the home of Lord Freud to protest at the Government's controversial welfare changes. Campaigners from UK Uncut protested outside Freud's home, estimated to be worth £1.9m.
In July 2013 Freud was criticised in The Guardian for his "withered meanness" that sought to explain the dramatic increase of food banks in the United Kingdom as being due to people taking goods that were available for free rather than anything to do with his welfare reforms.
2014 Conservative Party Conference
In October 2014 a recording of Freud addressing a fringe meeting at the 2014 Conservative Party Conference was released. In the recording he said there "was no system for going below the minimum wage". But he added: "You make a really good point about the disabled ... There is a group - and I know exactly who you mean - where actually, as you say, they're not worth the full wage and actually I'm going to go and think about that particular issue, whether there is something we can do nationally, and without distorting the whole thing, which actually if someone wants to work for £2 an hour, and it's working can we actually...". At the time of his remarks the UK national minimum wage was £6.50 per hour (aged 21+), £5.13 per hour (aged 18–20), £3.79 per hour (under 18), £2.73 per hour (apprentices aged 16 to 18 and those aged 19 or over who are in their first year). Freud's comments were criticised by the Labour Party at Prime Minister's Questions on 15 October 2014. Freud later gave a 'full and unreserved apology' in which he said: “I was foolish to accept the premise of the question. To be clear, all disabled people should be paid at least the minimum wage, without exception, and I accept that it is offensive to suggest anything else".
- Confessions of an apologetic investment banker, The Guardian, 4 August 2006
- "Lord Freud on welfare: making the poor pay for the risk-taking of the rich", Richard Seymour, The Guardian, 23 November 2012, fetched 1 October 2013
- Freud in the City: How Yeltsin on a tank saved my job, Daily Telegraph, 1 May 2006
- "David Freud Parliamentary Under Secretary of State (Minister for Welfare Reform)
- Alexander Preston, "Chewed up and spat out", New Statesman, 31 July 2006
- "Welfare is a mess, says adviser David Freud", The Daily Telegraph, 4 February 2008
- "Welfare is a mess, says adviser David Freud", The Telegraph, 2 February 2008</
- Dominic Lawson, “Welfare Reform Needs Sticks and Carrots”, The Independent, 6 March 2007
- "Increasing condemnation of the Work Capability Assessment", Bernadette Meaden, Ekklesia
- The London Gazette: . 2 July 2009. Retrieved 28 July 2013.
- Lords Hansard for 29 June 2009
- "Letter to David Cameron about benefit fraud", October 2010, Church of Scotland, fetched 1 October 2013
- "Reply from Welfare Reform Minister Lord Freud to the letter sent to the Prime Minister, signed by a range of Churches and Christian organisations", Church of Scotland, fetched 1 October 2013
- Jowit, Juliette (22 November 2012). "Welfare reform minister: claimants 'have a lifestyle' on the state". The Guardian (Manchester). Retrieved 25 November 2012.
- "Benefits cap protests outside Lord Freud's home", ITV, Sat 13 April 2013
- "To Lord Freud, a food bank is an excuse for a free lunch", Zoe Williams, The Guardian, 4 July 2013
- "Freud: Pressure continues over disability pay comments". BBC News. 16 October 2014. Retrieved 16 October 2014.
- "National Minimum Wage rates". GOV.UK. 1 October 2014. Retrieved 16 October 2014.
- "Ed Miliband questions Lord Freud future over disabled work claims". BBC News. 2014-10-15. Retrieved 2014-10-15.
- Bennett, Asa (2014-10-15). "Lord Freud Urged To Resign For Saying Disabled 'Not Worth' Minimum Wage". Huffington Post. Retrieved 2014-10-15.
- "Lord Freud Accused Over Disabled Comments". Sky News. 2014-10-15. Retrieved 2014-10-15.
- Watt, Nicholas; Wintour, Patrick (15 October 2014). "Lord Freud offers ‘unreserved apology’ for comment about disabled people". The Guardian. Retrieved 15 October 2014.