George Osborne has spent at least £20,000 of taxpayers' money trying to fight off an EU cap on bankers' bonuses.
The Treasury revealed that it has spent £20,289.60 in fees for its legal challenge, which it lodged last September in a bid to stop the bonus cap, which limits bankers' bonuses to the same level as their base salary, following a Freedom of Information Request from the Huffington Post UK.
The government justified its legal challenge as it argued the EU bank bonus cap, which came into force this January, would end up making the finance sector more risky.
Labour's shadow financial secretary to the Treasury Cathy Jamieson told HuffPostUK: “When families face a cost-of-living crisis and business lending is falling it’s astonishing that George Osborne’s priority is to spend taxpayers’ money fighting a cap on bankers’ bonuses.
“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.
“The case for repeating Labour’s tax on bank bonuses, to fund a compulsory jobs programme for young people, is getting stronger by the day.”
Bankers can be paid twice their base salary in bonuses with shareholder approval, but banks will only be able to pay more than that in bonuses if they ask their national regulator to be exempted from the cap.
The EU bank bonus cap was a subject of recent political controversy as the government was put under pressure to reject any request from the state-owned Royal Bank of Scotland to raise the cap and allow it to pay bonuses greater than their level of pay.
The furore comes as the EU officials are said to be increasingly "disturbed" by reports that UK banks are bringing in novel forms of pay like cash and share-based adjustable allowances in order to get around the bonus cap.
British officials have reassured their EU counterparts that the bonus cap will be fully enforced while the legal challenge is being heard in court, according to the Financial Times.
A spokesperson for Michel Barnier, the EU commissioner for financial services, said: “One would expect banks to interpret [the rule] in a common sense and straightforward way without trying to circumvent it by including in fixed remuneration elements which actually vary in level.”
The Treasury defended its legal challenge in September, saying: "Britain has been at the forefront of global reforms to make banking more responsible, including big reductions in upfront cash bonuses and linking rewards to long-term success.
"These latest EU rules on bonuses, rushed through without any assessment of their impact, will undermine all of this by pushing bankers' fixed pay up rather than down, which will make banks themselves riskier rather than safer."
