LONDON BRIEFING:The £7 billion being pumped into Ireland is another bailout of British institutions, writes DAVID TEATHER

THERE WAS only one story in London this week, and that was Ireland. Which is exactly what the government spinmeisters must have been hoping when they quietly confirmed rumours that the coalition is backing away from proposals that would have forced UK banks to disclose exactly how many millionaires they employ.

It was an irony not lost on some that the amount Britain had committed to Ireland, some £7 billion, was the same amount that British banks are expecting to pay out in bonuses this year.

The issue of bankers’ pay remains a cankerous sore for the public at large, a situation exacerbated as spending cuts hit education and benefits for the poorer parts of society. The issue now also looks set to cause a rift among the coalition, as Vince Cable, the Liberal Democrat business secretary continues to fire salvos across the banks’ bows. As his colleagues in government backpedalled, Cable stepped in to remind us again of the role that banks, and particularly their rich rewards, have played in the current mess. “Outrageous and irresponsible pay structures were a driver in our financial crisis,” he said, as he continued to put his shoulder behind reform.

Cable has staked a lot on bankers’ bonuses. In opposition, he suggested that banks disclose the pay of anyone earning more than the prime minister’s salary of £142,500.

But even the architect of the plans to force more transparency on the banks has now spoken against adopting the rules. David Walker, commissioned by the Labour government to examine the issue of bankers’ pay, had recommended that the City should disclose anyone earning more than £1 million, but writing this week in the Financial Times, he backtracked.

Walker urged the government not to implement his proposals because of a lack of international co-operation on transparency and reform – to adopt his ideas, he argued, would put Britain at a competitive disadvantage.

Chancellor George Osborne appeared to agree: “Better for Britain to promote this internationally rather than just unilaterally,” he said.

It is the same argument spun out time and again when tighter regulation of the banks is threatened – finance can be run from anywhere, and the banks or hedge funds will simply move on, the banks to New York or Frankfurt, and in the case of hedge funds, to small cantons in Switzerland.

Under rules agreed in Basel, the size of a bonus pool would be revealed as a total rather than broken down in separate bands of pay. Europe-wide rules, which are likely to be finalised next month, would also defer the payment of bonuses and reduce the percentage paid in cash. But the banks are already finding ways around that particular problem. HSBC is planning to double the basis pay for thousands of its top investment bankers.

The former City minister Paul Myners said that by ditching the rules on transparency, the government had demonstrated “the power of the banking lobby”.

The government has also talked tough with the formation of the Banking Commission, which has been tasked with examining whether the banks should be broken up; the high street retail businesses being split from investment banking, the so-called “casino” arms.

But confidence is fading that any recommendations would eventually make it on to the statute book and a feeling is growing that the issue of banks and pay has simply been kicked into the long grass.

Those who keep a weather eye on the banks meanwhile, noted that the £7 billion being pumped into the Irish economy was, in effect, another bailout of the British banks, which are huge creditors to the Irish banks, and have almost £140 billion invested in the state. Only this time it has been cast very differently for the public view.

RUPERT MURDOCH has made some enemies in his time and the media tycoon, who owns the Sun and the London Times, has raised the hackles of rivals again with his plan to buy that part of satellite broadcaster BSkyB that he doesn’t already own.

The usual suspects have lined up to criticise the deal and Murdoch’s tightening grip over the British media.

An unlikely alliance formed last month between the companies behind the Daily Telegraph and the Daily Mail – both supporters of the Conservatives – and the owners of the Guardian and the Labour-backing Daily Mirror, who together petitioned business secretary Vince Cable to block the deal.

But now Murdoch faces perhaps his most implacable opponent, the Church of England. On Monday, the church said it had made a submission to media regulator Ofcom, arguing that Murdoch’s News Corp should be prevented from the takeover because it would threaten media plurality.

Grist to the mill for those who like to characterise Murdoch as something akin to the devil.

David Teather writes for the Guardianin London. Fiona Walsh is on leave