Member News
By Sam Macrory - 30th November 2009
Shadow minister Lord Freud tells The House Magazine about welfare reform, his experiences growing up in a famous family and why he has always voted Tory.
It is not an unmixed blessing to have a famous forebear, but it certainly acts as a motivating influence.
My father, Anton, hammered into me the importance of our family heritage.
He treated the Nazi regime almost as a personal affront, and in 1945 [as a member of the Special Operations Executive], he parachuted back in to Austria and single-handedly captured the Nazi aerodrome of Zeltweg.
It was a suicidal act, and without that driven sense of identity as the grandson of Sigmund Freud, and the need to live up to such a high achiever, I don't believe he would have made the attempt.
Both my parents were foreign. I was slightly chippy as a boy, this deriving partly no doubt from this external background. It gave me the feeling that I needed to try a bit harder to earn my position in society.
I did PPE at Merton College, and despite the revolutionary sentiment of the time – I was there between 1969 and 1972 – I found myself far more in tune with Conservative thinking: a responsibly fiscal stance; efficiency in running government; the importance of individual freedom.
That's why I have always been a Tory voter.
After leaving Oxford I trained as a journalist on the Western Mail in Cardiff before joining the Financial Times in 1975.
I had decided that I wanted to be a journalist from the age of 14 or so. I think it's possibly the most exhilarating job there is when you're young.
You meet all the key people in whatever area you're doing, and you're involved with the issues of the day. I've noticed that the excitement often fades as journalists become older, though.
They are mostly very smart people and they resent merely reporting the activities of their contemporaries when they are out there making the weather.
From my four-year stint on the Lex column, I was offered a job in the City with Rowe & Pitman, one of the two leading corporate brokers. It's one I'd take again any day of the week.
Up to a quarter of the big deals that went through the market would have to be assessed, then priced, then sold, and they asked me to come and do it.
You couldn't be that much of a generalist today, but it was one of the most exciting jobs you could imagine.
The City is all about deals working or not working. If you get a calculation wrong by just a penny then it could go down by hundreds of millions of pounds, with your whole career on the line.
I was so upset when it emerged that the costings for Eurotunnel were badly wrong.
It was my first really important deal – most financiers thought it impossible – and for me it was a huge learning experience in not taking anything on trust when it comes to figures.
Luckily, it was a lesson I had learned by the time I was responsible for sorting out the looming disaster of the Channel Tunnel rail link finances in 1998, and by 2003 I was vice-chairman of investment banking at the firm, by then called UBS.
However, investment banking is probably a job for people up to 50. I was 53, and I began to feel that I had done everything I wanted to do in banking.
When I was in the City it didn't occur to me to write a book about it. I had thought I would like to write a history book of some sort, but it suddenly occurred to me that I had lived through a piece of history that no-one had recorded in a first-hand way.
I'd had 11 years as a journalist and had been at the heart of the City for 20 years through a financial revolution, so if I didn't write it, who else would? I thought I owed it to the City. [Freud in the City, Bene Factum, 2006.]
I joined the Portland Trust as CEO at the end of 2005. I thought that the Israel-Palestine issue was one of the most intractable problems that the world has to face, and economics could be a real driver to bring stability to the area.
The most interesting project I worked on was an attempt to get a housing boom started in the West Bank. We have just got to the stage where the first of the new towns – Rawabi – has been approved by the Palestinian authorities.
In late 2006 the government approached me to undertake a review of welfare reform.
I'd had a long career as a banker, and when you're a banker you act for the government of the day – it's important not to show your political views.
I thought that welfare reform was a critical area and one that was sadly neglected, so I wanted to find out whether I could revitalise the agenda.
Very little had been done on welfare reform ever since Frank Field had left the government, and everyone in the industry had got pretty stale.
John Hutton, then work and pensions secretary, wanted someone to come from the outside, have a good look at it, and ask some basic questions. It had to be done incredibly fast.
As a former journalist and investment banker, I was someone who could be relied on to do something on a tight timescale, and I suspect that was more important than any particular expertise.
I wanted to restructure the welfare reform industry so that it could get payment by results, but my report moved in a slightly odd way and went in and out of political favour.
Tony Blair was clearly pushing my report, but at the launch in early March 2007 Gordon Brown was very careful to say that the report underpinned the importance of welfare reform, which he would champion, rather than that he would champion my report.
At the time, however, it wasn't clear to me that it had stalled.
By the end of the summer Peter Hain, who succeeded Hutton, called me in and said he wanted to work through my agenda, although he had far less conviction and energy in this area than his successor James Purnell would later demonstrate.
The Conservatives had always shown a great interest in the approach suggested by my report.
The convention is that you brief all the political parties, which I did very carefully, and Chris Grayling, then the shadow pensions secretary, adopted the report's principles pretty wholeheartedly.
David Cameron announced the Conservative strategy along these lines in early 2008, and I was very encouraged to see it.
Purnell then asked me to advise him on implementing my report.
Well, of course I would advise anyone on how to implement my report, so I said I would do it for a year.
I made it very clear that the key issue was all the people on incapacity benefit.
The government accepted this in principle, though working on the issue actually turned out to be pretty slow in practice.
When the year was up, the Conservatives asked if I would like to work for them in a political role, and I thought it made a lot of sense.
I had had various conversations about various things, from about mid-2007, but the idea for the role came up in the week before the announcement was made.
It wasn't the traditional walking-across-the-floor as some have painted it – it was walking from a neutral advisory position into a formal political position.
I decided I would be happy to display my true colours and even happier if I could do this particular job.
I've found the House of Lords fascinating on many different levels. It's a stunning place and a privilege to be here – I've met so many clever people from different areas of public life.
I've also found the actual business of debates extremely exciting: there is so much immediacy to facing someone such a small distance away, and argue a point with them in this beautiful forum.
There doesn't appear to be an underlying methodology to the procedures that a newcomer can grasp, however. You just have to experience them one by one to learn what to do. Until you do, it's difficult to relax.
If the Conservatives are elected, and if David Cameron asks me to work on welfare reform, then I'd be pleased to do it.
Transforming our welfare system is critical to get right, as I think that excessive dependency is doing serious damage to the fabric of our society.
If I'm asked to spend the next four or five years slogging that out then, with some trepidation, I'll try to achieve it.
I like to read history – I'm a great enthusiast for ancient history, in particular – and I keep active.
I swim every morning round the pond in Highgate, and I cycle to work most days. My character in David Hare's new play 'The Power of Yes' jokes: "I got out of the City with my health, my wealth and my wife."
It's important to keep a balance in your life and for me that means time for family and friends is a priority.
Interview by Sam Macrory.
Photography by Paul Heartfield.
This interview was first published in the latest issue of The House Magazine, available from today.
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