PARLIAMENT will hold its own investigation into rigging of the Libor interest rate after Labour MPs failed to force a public inquiry into the scandal yesterday.
Following a bruising debate between chancellor George Osborne and Ed Balls, his opposite number, the government pushed through a motion that will set up a parliamentary inquiry led by Conservative MP Andrew Tyrie.
It is expected to report back in December and its findings will be used to influence the forthcoming Banking Bill.
Labour had spent much of this week demanding a judge-led probe – similar to the ongoing Leveson Inquiry into media ethics. But MPs voted 330 to 226 in favour of a swift parliamentary investigation instead.
“People will ask why we are not having the full independent public inquiry that this country needs,” Ed Balls said after the vote, before giving his backing to Tyrie’s committee.
Tyrie welcomed Balls’ support: “I will do whatever the House asks me to do, but I believe it is only worth trying to chair this committee if it has the full support of all the major parties.”
The government will now seek to agree the membership and remit of the investigation before parliament rises for the summer recess at the end of this month.
Beforehand the debate centred on the personal enmity between Balls and Osborne, exacerbated by the chancellor’s claim that ministers in the previous government had “questions to answer” over Libor-fixing.
Osborne struggled as he was repeatedly asked to provide evidence to back-up the claim, which was reported in yesterday’s Spectator. “The reason why we advocate an open, public inquiry, judge-led, is to get precisely to the bottom of all these things,” Balls replied.
*Meanwhile, it emerged yesterday that the Serious Fraud Office is to receive a funding boost following the record-breaking fines issued to Barclays, enabling it to pursue an investigation into Libor-fixing.
Osborne and Balls battle it out
Let him [Balls] explain what Labour’s involvement was, who were the ministers, who had the conversation, who were the senior figures.
At no point, at any time when I was an adviser or a minister in the City, was any point put to me by the Financial Services Authority, the Treasury, the Bank of England or anyone in this house that there was any reason to doubt the integrity of the Libor market.
I have never seen the Labour party and the shadow chancellor so rattled about their time in office.
The cheap and partisan and desperate way in which you and your aides have conducted yourselves in recent days does you no good, it demeans the office you hold and most important it makes it harder to achieve the lasting consensus we need.