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December 8, 2011updated 10 Jan 2016 3:26pm

Zahawi and Hancock on ‘Masters of Nothing’

By Spear's

The Wide Blue Yonder
A new breed of Tory MPs emerged from the 2010 general election, and already some are making their mark. Anne McElvoy looks at two of Cameron’s cabal

PICTURE, IF YOU will, two top Tory young guns: the dandyish Matthew Hancock and his ally Nadhim Zahawi. Hancock is known largely as an accomplished economist and George Osborne’s representative on earth. Zahawi, an Iraqi Kurd by background, is a cheery entrepreneur. He made his mark as a new boy in the Commons when a musical tie he’d bought for charity began tootling tunelessly during a debate in the chamber.

These two are the poster boys of the 2010 Cameronian intake — smart, privately educated, confident, just a bit cocky. And just before they get on your nerves too much, they’ve written one of the most intriguing political books of 2011 as joint authors of Masters of Nothing; The Crash and How It Will Happen Again unless We Understand Human Nature, which is likely to make you want to argue furiously for and against its suggestions.

Both men saw the financial crisis of 2007-08 at first hand. Zahawi experienced it as a businessman — he had helped set up the successful polling and research company Yougov and taken the company public in 2005. Hancock had been at Osborne’s side as he tried to steer Tory economic policy from an initial acceptance of Labour spending plans (how bizarre that now sounds) to a stringent deficit-reduction plan intended to make Britain a ‘safe harbour’ in the global financial storm.

After the fall, the Queen, along with many others, wondered why no one had seen it coming. Of course, some people did — we just didn’t take any notice of them. Doom-mongers tended to be on the Left, so they were unpalatable to City wealth-creators. The duo give due credit to Sir Andrew Large, the deputy governor of the Bank of England until 2006, who raised doubts about the risk-awareness of the banks in a trenchant speech at the London School of Economics.

It went unheeded by the Labour government and the banks themselves. And although Hancock-Zahawi don’t say so, it also fell on purposefully deaf ears in a Conservative Party still naturally attuned to deregulation and loth to intervene in what the banks were doing. The authors compare Large’s treatment with the parable of Lear’s fool: ‘Lear won’t listen, because to do so would mean accepting that he has made a terrible mistake — and there will be a terrible price to pay.’

The fashionable science of behavioural economics is at the root of this book’s analysis of how so many different people could collude in excessive risk-taking. So Hancock noted in a Today programme interview that most of us consider ourselves largely rational, but others a lot less rational than we are. Funny that. One is tempted to add — to two loyal backbenchers — that most politicians are apt to think their reforms will succeed and the other party’s will fail. But really, this is a remarkably unpartisan book that speaks for the best end of the Cameron project — intellectually lively, irreverent and capable of borrowing ideas from the Left and adapting them to the days of a new centre.

This leads the authors into plenty of recommendations to frighten the pin-stripes. We get some adroit banker-bashing along the way — not least the revelation that Sir Fred Goodwin came down hard on staff who had the temerity to present him with pink wafer biscuits at teatime. Are there no standards left in the Square Mile?

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The theme which interests me most is the daring embrace of more female representation on boards and in general terms a cry for more female participation in the City at high levels and on the trading floor, to offset the tendencies of testosterone-fuelled young males. Isn’t this the kind of recommendation that used to get Harriet Harman, Labour’s doughty campaigner for female equality, labelled ‘Harriet Harperson’ and accused of seeking to castrate (I do mean professionally) men to advance women?

No matter. Hancock and Zahawi turn the traditional Conservative argument against measures to promote the advancement of women on its head.â¨â¨Workplaces with a higher percentage of women are less inclined to the wilder end of risk-taking, they say, so companies should strive to promote enough women to ensure that a cultural mix is reached. If that means expanding boards to preserve male expertise (the Norwegian solution), so be it.

There’s plenty to cavil at here — not least the idea that you can predict the risk-aversion of women so accurately when they actually get the job. The female employees with drive to succeed are often more likely to be risk-takers than the run of their sex, for instance. Yet the wider cultural argument is well made. Hancock has spoken about the tendency of boards to assume that the next crop of board members will be remarkably like the ones they already have — a tendency underpinned by the commercial interest of recruitment consultants to give (mainly male) bosses the kind of candidates they expect for board appointments.

In one case, an accomplished female asset manager had taken a career break when she had her fourth child and used her time off to become a governor at a troubled school, advise charities on investment and do oodles of the other Big Society-type projects the coalition claims to love. When she tried to secure a couple of non-executive directorships in her sector, the response of the recruitment consultants was that her work outside the City wouldn’t count and indeed might weigh against her. Better just focus on her old workplace CV and stretch the dates a bit.

What I like about this book is that it puts across a real sense of injustice about this situation and the hoary excuses used to maintain the status quo. One contemporary of Hancock’s (the leading political figure of the two writers) told me he doubted whether his colleague was really as exercised about such things as he claimed — the suggestion being that it’s a kind of pose for the next-generation Tories. Well, who cares? Lots of progress starts out with people just pretending to play along with it, and at least these two are putting themselves on the line to change something; not many of the new intake (or the old one for that matter) can claim to do that.

Yet there is still a comical element of ‘Physician, heal thyself’. A rather swish party was held by Osborne to launch the book in Number 11: the entire clan of strategists, advisers, think-tankers, senior Cameronians and political writers were in attendance. The ratio of men to women in the room that I counted was 12:1, and that included a lot of young women who help the coalition Brahmins get on with their important jobs.

What will be interesting is how much the broader argument of this book turns into practice under the kind of growth and economic pressures facing the coalition. On pay, they argue that incentivising high-earning, short-termist risk should be replaced by encouragement to pour profits back in to the system. Yet legislating for such changes is always a painful process, not least for a party that also wants to reward entrepreneurial zeal and exhibit a light touch. The so-far uncertain treatment of the banks and their bonuses is the result.

Few at Westminster would doubt that Hancock, already honoured with a seat on the Public Accounts Committee, and Zahawi, who sits on the Business and Skills Committee, have great futures ahead of them. They’re mini-ministers in the making who bear the burden of promise. Zahawi will have to tone down his flashier side and lose the musical ties and air of wealthy bombast. And Hancock, if he wants to follow his friend to Number 11, needs to shed a smidgeon of his self-certainty and carve out an identity which does not tie him too firmly to Osborne, since political shares, like the other kind, can go down as well as up.

Still, these two canny authors of Masters of Nothing look like two sound prospects in the demolition derby of Westminster life. Place your bets.

Anne McElvoy is public policy editor of the Economist and presents Night Waves on BBC Radio 3

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