George Osborne talks to the press as he arrives for an economic and financial affairs meeting (Ecofin) in Brussels on November 7, 2014. Photograph: Getty Images.
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Osborne drops legal challenge to EU bank bonus cap

With attention on the Rochester by-election, the Chancellor makes his retreat.

Under the cover of the Rochester by-election, George Osborne has abandoned his long-running legal challenge to the EU's cap on bank bonuses. The decisive blow came earlier today when an advocate general at the European Court of Justice advised that the new law, which restricts payouts to 100 per cent of a bankers’ salary, or 200 per cent with shareholder approval, should be upheld. 

Osborne said: "I’m not going to spend taxpayers’ money on a legal challenge now unlikely to succeed. The fact remains these are badly designed rules that are pushing up bankers’ pay not reducing it. These rules may be legal but they are entirely self-defeating, so we need to find another way to end rewards for failure in our banks."

Ed Balls has been swift to respond, deriding the move as "a humiliating climbdown". He said: "The Chancellor revealed his true priorities when he decided a year ago to spend taxpayers’ money fighting a bank bonus cap while working families face a cost-of-living crisis. He should tell taxpayers how much money he has now wasted on this challenge, which we warned him against.

"It shouldn’t have taken the EU to act to rein in excessive bonuses, but George Osborne has totally failed to act here in Britain.

"Labour will reform the banks and levy a tax on bank bonuses to fund a paid starter job for young people out of work for over a year."

The cap has been criticised by left-wing economists on the grounds that it simply allows banks to inflate employees' basic pay (which is not subject to claw-back) and does little to tackle the underlying causes of excessive risk-taking. But the politics of this debate are too exquisite for Labour to get caught in technicalities. Expect it to swiftly FOI the Treasury to find out just how much of the public's money Osborne spent on his doomed challenge. 

Meanwhile, it's worth noting that forced to side with either the EU or the City of London, Nigel Farage has sided with the City. He told the Evening Standard: "A lot of people in Rochester and Strood commute to London to work in the finance industry. They will be reading about this in the Evening Standard on their way home and may well feel dismayed by the verdict.

"It is the constant drip, drip, drip of Britain losing every single negotiation and ruling. We never win and it’s time we woke up to that fact."

The former trader added: "If you applied this law to the Premier League you would not expect Britain to remain one of the world’s greatest footballing nations. London is the world’s greatest centre for a lot of industries, including finance."

Farage's stance is consistent with his europhobia and his free market principles. But it is unlikely to go down well with Ukip voters, who, as polls have consistently shown, lean to the left on economic issues. 

George Eaton is political editor of the New Statesman.

Oli Scarff/ Getty
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Andy Burnham's full speech on attack: "Manchester is waking up to the most difficult of dawns"

"We are grieving today, but we are strong."

Following Monday night's terror attack on an Ariana Grande concert at the Manchester Arena, newly elected mayor of the city Andy Burnham, gave a speech outside Manchester Town Hall on Tuesday morning, the full text of which is below: 

After our darkest of nights, Manchester is today waking up to the most difficult of dawns. 

It’s hard to believe what has happened here in the last few hours and to put into words the shock, anger and hurt that we feel today.

These were children, young people and their families that those responsible chose to terrorise and kill.

This was an evil act. Our first thoughts are with the families of those killed and injured. And we will do whatever we can to support them.

We are grieving today, but we are strong. Today it will be business as usual as far as possible in our great city.

I want to thank the hundreds of police, fire and ambulance staff who worked throughout the night in the most difficult circumstances imaginable.

We have had messages of support from cities around the country and across the world, and we want to thank them for that.

But lastly I wanted to thank the people of Manchester. Even in the minute after the attack, they opened their doors to strangers and drove them away from danger.

They gave the best possible immediate response to those who seek to divide us and it will be that spirit of Manchester that will prevail and hold us together.

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