New Labour's dead soul

If anything was still needed to convince people of the debased and degraded nature of the social system presided over by the New Labour government, the Freud report – which proposes ways of reducing the number of people on benefits - would fit the bill. As most people have come to realise, the external appearance of every New Labour initiative is an inversion of its true intent. And this one is no different. Whilst presented as a way of helping long-term jobless into work, the real motivation is to turn the benefits system into a money-spinning bonanza for private sector traders. A quick look at the track record of the author, David Freud, great grandson of Sigmund, tells you all you need to know about his interest in those who have been jobless for a year or more, single parents and the long-term sick and disabled. As a stockbroker and banker, Freud was at the centre of the global financial revolution of the 1980s, which he describes as a battle-ground of individualism. He played a pivotal role in the flotation of the now hopelessly-indebted Eurotunnel. At Warburg, his Euro Disney team launched the first truly pan-European flotation, raising £600m – only to be faced with potential disaster when the price went into tail-spin. He was obliged to admit to Deputy Prime Minister, John Prescott that his team raising the finance for the Channel Tunnel Railway Link had got their sums massively wrong. – by £1.2bn. And he was a leader when it came to raiding pension funds to finance big deals. Playwright David Hare described Freud’s autobiography as, "a highly readable, morally ambiguous account of twenty crazy years of buoyant capitalism". All in all, just the sort of man New Labour needed to sort out those obliged to eke out a life on the dole. You can almost hear the rubbing of hands in the City of London, as the idea of creating a market out of joblessness joins the equally odious market in carbon emissions. It’s all highly reminiscent of Nikolai Gogol’s devastating satire Dead Souls. The main character, Chichikov, having invented a quick route to riches, travels the countryside in 19th century Russia, meeting local landowners and offering to buy the legal ownership rights to dead serfs, for whom taxes remain payable until the next census. The more "dead souls" he owns, the higher his social status will grow, until he is able to use them as backing for a huge loan to buy a large estate to which he can retire. At least, that’s the plan. Very New Labour.

Gerry Gold, economics editor