It goes without saying that he thinks private sector providers are able to adapt more quickly to change, but he isn't convinced that the funding model of the 'new' New Deal is right: "The more people we promise to get into work, the less we will be paid for each one." For someone who has devoted the last decade to working with the people who are "farthest from the labour market", this order of priorities seems wrong. He fears that the ministerial priority in a recession will be to turn round the most employable claimants as quickly as possible and worry about the "hard-to-reach" cases later - thus making the problem of residual unemployment worse.

His aim, as a provider of welfare-to-work services, is to "protect the viability of our provision" during the downturn. But, he says, "in the upturn we've got to be careful that we move back as quickly as possible to an aggressive link between payment and outcomes". Otherwise the taxpayer will be picking up the tab for the deadweight costs of paying providers for services that claimants don't need.

Although Johnson's perspective is different from that of the politicians and the politician's adviser, he shares their general view of the fundamental reforms needed, recession or no recession. "We must design a system in which payments are linked to longterm outcomes, but in which frontline agents make the decisions on how to achieve those outcomes," he says.  This echoes Field's long-held view about the need to turn Jobcentres into independent agencies. "When I was Welfare Reform Minister I wanted to turn local Jobcentres into co-ops so that they could compete," he says. "The quality of staff was amazing but they were hampered by the rules. If they had a budget related to getting people into work and had staff bonuses, then at the end of the year they would be keen on declaring a profit."

Role of incentives
Getting the incentives right for those charged with helping the unemployed to find jobs, however, is only half the picture. The other half is to change the incentive structure for the unemployed themselves. That is the aim of Duncan Smith's attempt to remodel the entire benefits system. Freud pointed out in an interview last year that: "If you want a recipe for getting people on to Incapacity Benefit we've got it. You get more money [than on JSA] and you don't get hassled; you can sit there for the rest of your life. It's ludicrous that the disability tests are done by people's own GPs - they've got a classic conflict of interest and they're frightened of legal action."

When Freud was hired as a part-time adviser by James Purnell, the new Work and Pensions Secretary, a year ago, there was a marked change in government's rhetoric. He spoke of a system that sent 3 million people into "a form of economic house arrest" by encouraging them "to stay at home and watch daytime TV". The other big change that Freud brought in to government was the principle of using future benefits savings to pay for expensive measures today. Getting people off Incapacity Benefit and into work is expensive, he concedes, but agrees with Duncan Smith that it is "more expensive not to."

John Rentoul is Chief Political Commentator for The Independent on Sunday