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.

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Politics doesn't just connect us to the past and the future – it's what makes us human

To those people who tell me that they’re not interested in politics, I often say: “But politics is interested in you!”

I have long been haunted by a scene in George Orwell’s great novel Nineteen Eighty-Four. Winston Smith, the hero, is forced to watch propaganda films depicting acts of war and destruction. He is moved by something he sees: a woman trying to protect a child by wrapping her arm around him as they are attacked. It’s a futile gesture. She cannot shield the boy or stop the bullets but she embraces him all the same – before, as Orwell writes, “The helicopter blew them both to pieces.”

For Winston, what Orwell calls the “enveloping, protecting gesture” of the woman’s arm comes to symbolise something profoundly human – an expression of selflessness and of unconditional love in an unforgiving world. Scenes such as this we now witness daily in footage from the besieged eastern Aleppo and other Syrian towns, people in extreme situations showing extraordinary dignity and kindness.

I read Nineteen Eighty-Four for the first time in late adolescence. I’d dropped out of sixth-form college without completing my A-levels and was commuting on a coach from my parents’ house in Hertfordshire to London, where I worked as a junior clerk for the Electricity Council. During this long daily journey – sometimes two hours each way – I started to read seriously for the first time in my life.

I was just getting interested in politics – this was the high tide of the Thatcher years – and Orwell’s portrayal of a dystopian future in which Britain (renamed “Airstrip One”) had become a Soviet-style totalitarian state was bleakly fascinating. Fundamentally the book seemed to me to be about the deep ­human yearning for political change – about the never-ending dream of conserving or creating a better society.

Nineteen Eighty-Four was published in 1949 (Orwell died in January 1950, aged 46), at a time of rationing and austerity in Britain – but also of renewal. Under the leadership of Clement Attlee, Winston Churchill’s deputy in the wartime coalition, the Labour government was laying the foundations of what became the postwar settlement.

The National Health Service and the welfare state were created. Essential industries such as the railways were nationalised. The Town and Country Planning Act was passed, opening the way for the redevelopment of tracts of land. Britain’s independent nuclear deterrent was commissioned. New towns were established – such as Harlow in Essex, where I was born and brought up.

To grow up in Harlow, I now understand, was to be part of a grand experiment. Many of the families I knew there had escaped the bomb-ruined streets of the East End of London. Our lives were socially engineered. Everything we needed was provided by the state – housing, education, health care, libraries, recreational facilities. (One friend described it to me as being like East Ger­many without the Stasi.)

This hadn’t happened by accident. As my father used to say, we owed the quality of our lives to the struggles of those who came before us. The conservative philosopher Edmund Burke described society as a partnership between “those who are living, those who are dead, and those who are to be born” – and I find this idea of an intergenerational social contract persuasive.

Progress, however, isn’t inevitable. There is no guarantee that things will keep getting better. History isn’t linear, but contingent and discontinuous. And these are dark and turbulent new times in which we are living.

A civil war has been raging in Syria for more than five years, transforming much of the Middle East into a theatre of great-power rivalry. Europe has been destabilised by economic and refugee crises and by the emergence of insurgent parties, from the radical left and the radical right. The liberal world order is crumbling. Many millions feel locked out or left behind by globalisation and rapid change.

But we shouldn’t despair. To those people who tell me that they’re not interested in politics, I often say: “But politics is interested in you!”

And part of what it means to be human is to believe in politics and the change that politics can bring, for better and worse.

What, after all, led so many Americans to vote for an anti-establishment populist such as Donald Trump? He has promised to “make America great again” – and enough people believed him or, at least, wanted to believe him to carry him all the way to the White House. They want to believe in something different, something better, in anything better – which, of course, Trump may never deliver.

So politics matters.

The decisions we take collectively as ­humans have consequences. We are social creatures and rational agents, yet we can be dangerously irrational. This is why long-established institutions, as well as the accumulated wisdom of past generations, are so valuable, as Burke understood.

Politics makes us human. It changes our world and ultimately affects who we are and how we live, not just in the here and now, but long into the future.

An edited version of this essay was broadcast as part of the “What Makes Us Human?” series on BBC Radio 2’s “Jeremy Vine” show

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.

This article first appeared in the 01 December 2016 issue of the New Statesman, Age of outrage