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Chancellor George Osborne’s project to boost his banker pals’ bonuses headed for failure yesterday after a key EU legal expert backed plans to cap payouts.
Findings by European Court of Justice official Niilo Jaaskinen left the Tory facing fierce criticism for squandering taxpayers’ cash fighting the popular proposals.
Mr Osborne has set up a Treasury team to argue against the so-called “bonus cap” which would see limits of 200 per cent of salary imposed across the European Union.
But his Labour shadow Cathy Jamieson ridiculed the Chancellor for spending crucial resources opposing the City clampdown.
“While working people face a cost-of-living crisis and lending to business is falling it’s astonishing that George Osborne’s priority has been to spend taxpayers’ money fighting a cap on bankers’ bonuses,” she said.
“It shouldn’t have taken the EU to act to rein in excessive bonuses, but there has simply been no action from the Chancellor here in Britain.”
A final European Court of Justice decision is due in the spring — but Advocate General Mr Jaaskinen’s advice is widely expected to be adopted.
The Chancellor had claimed that the plans, which would see City fat cats limited to bonuses of 100 per cent of salary or 200 per cent with the agreement of shareholders, would leave London at a disadvantage compared to other global finance hubs.
Treasury officials complained that wages would have to rise instead and it would be harder to slash back later.
But Mr Jaaskinen rubbished complaints that the “bonus cap” would be a problem.
Mr Osborne was undeterred yesterday, with Treasury officials vowing to do battle on behalf of City firms which together ploughed £1.3 million into his party in the last quarter.
Bonuses hit a record high of £10 billion in 2013, prompting Labour to pledge a new tax on the payouts to fund apprenticeships.
But financiers have already moved to set up an avoidance scheme, which has seen “allowances” replace bonuses.
The scam has since been ruled unlawful by the European Banking Authority.
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