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Tories call for measures to cut sexism from the City

New book lambasts ‘testosterone-fuelled’ atmosphere that feeds a culture of risk-taking and helped cause the credit crunch

Banks should be forced to publish the level of average pay and bonuses at each tier of management to prevent women being short-changed in the male-dominated world of the City, two Tory backbenchers argue in a new book.

In Masters of Nothing, Matthew Hancock, who was George Osborne’s chief economic adviser before being elected to parliament last year, and his co-author Nadhim Zahawi, claim the City’s testosterone-fuelled culture created a “sexio-economic effect”, which led to reckless risk-taking and helped to cause the credit crunch.

They call for legislation to boost the number of women in Britain’s boardrooms, if the male-dominated culture of high finance fails to change rapidly.

Hancock and Zahawi would also like to see banks forced to reveal the average remuneration at every level of management, broken down by gender, so that female staff can see if their bonuses match up to those of their male colleagues.

The proposals are more radical than anything suggested by the coalition, which has opted not to enforce legislation introduced by Labour that would have required all firms to carry out compulsory gender pay audits.

“In investment banking, the highly masculine culture has given rise to a working environment shaped by schoolboy pranks, pseudo-military posturing and an unhealthy dependence on the sex trade,” they say.

Bankers told them about “suit jacket sleeves being snipped off, unattended desks stuffed with rubbish, and a mobile phone injected with ketchup while the owner went off to fetch some lunch”. They say this working culture does not just put women off, it can also lead to poor decision-making.

“The predominance of aggressive men at high levels determines these social norms. Put it this way: can you imagine Sir Fred Goodwin [the boss of bailed-out Royal Bank of Scotland] ever stopping to think ‘am I good at my job?’ Yet people like Sir Fred Goodwin set the tone for what is considered to be successful.”

They quote one City worker as suggesting the catastrophic takeover of ABN Amro by RBS in autumn 2007 when the credit crunch was already in train as “just a pissing contest with Bob Diamond” – referring to the boss of Barclays, then in charge of Barclays Capital, which failed to clinch the deal, mercifully as it turned out.

“It can be called the ‘sexio-economic’ effect, or to put it more plainly, a ‘my bank’s bigger than yours’ phenomenon.”

Hancock and Zahawi detail a series of cases in which female City workers have been teased, mistaken for secretaries and dragged out to strip clubs. One Merrill Lynch banker told them: “Women can either copy men, or be aggressively feminine – there’s no middle ground.”

The authors cite research by British neuroscientists John Coates and Joe Herbert, showing that “at a deep neurological level, the masculine response to risk may well be implicated in boom-bust cycles”. The scientists argue that before the crash, Britain was, “doing what no society ever allows, permitting young males to behave in an unregulated way”.

The high levels of testosterone present on the typical dealing floor – which Coates and Herbert measured through saliva samples from traders – can lead to, “impulsiveness, harmful risk-taking, even euphoria and mania if additional steroids are taken at the same time”.

Hancock and Zahawi point out that at RBS in 2009, seven out of 10 clerical staff were female, but that fell to three out of 10 managers and one in 10 executives – and not a single board member was a woman.

“It is time to accept that finance is not full of men because it requires masculine behaviour, but that finance is dominated by masculine behaviour because it is full of men. That must change,” they say.

The intervention of the two ambitious young backbenchers underlines the fact that the new crop of Conservatives has a different, less laissez-faire approach to economic problems than older colleagues on the libertarian wing of the party.

“I’m in favour of meritocracy, so that’s where it comes from,” Hancock told the Observer. “Markets aren’t free if they don’t have a strong framework. I would rather it happen without legislation, but at the end of the day, if there’s a cultural barrier to meritocracy, you have to do something about it.” He added that he and his co-author also backed the coalition’s proposed changes to parental leave, announced by Nick Clegg this year, which would allow fathers and mothers to share part of their leave, to make it easier for both of them to share the responsibility for childcare.

The two MPs want the insights of behavioural economists – who suggest human beings do not always behave rationally – to be used in government decision-making more widely. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds