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Osborne’s Attempts to Blame Labour on Libor Risk Own Inquiry

Chancellor of the Exchequer George Osborne may have jeopardized a U.K. parliamentary inquiry into the bank interest-rate rigging scandal as opposition Labour Party lawmakers rejected his effort to blame them.

Labour’s business spokesman, Chuka Umunna, expressed concern today that the inquiry would be an effort “to make party-political points.” He cited the House of Commons debate yesterday in which Osborne said he’d like to see Labour Treasury spokesman Ed Balls “in the dock” over the affair that prompted Barclays Plc Chief Executive Officer Robert Diamond to quit this morning.

Andrew Tyrie, the Conservative lawmaker picked by Osborne to head the limited probe announced yesterday, said he’d only go ahead on a bipartisan basis. That suggests it won’t proceed without Labour backing. Today the government began to back down, announcing a debate on July 5 on whether to hold an inquiry run by members of both houses of Parliament, as proposed by Osborne, or an open-ended judge-led inquiry, as requested by Labour.

“I’m certainly not going to want to run an inquiry that is in any sense partisan or perceived to be partisan,” Tyrie, who heads the Commons Treasury Committee, told the BBC last night. “And I wouldn’t be prepared to participate if that were the case.”

Banking Bill

Prime Minister David Cameron said yesterday a judicial inquiry of the type currently looking into the media and phone-hacking would take too long to report. He said he wanted recommendations of this probe to be incorporated into his Banking Bill, to be put before Parliament in January.

“I suspect Labour might have tried to argue this anyway, but Osborne’s language has given them the cover to do it,” Philip Cowley, professor of politics at Nottingham University, said in a telephone interview. “The Labour rank-and-file have doubts about how impartial this inquiry is going to be.”

Announcing the July 5 debate, George Young, the leader of the House of Commons, suggested Tyrie might use the opportunity to suggest a third alternative. Labour’s John Healey suggested Tyrie’s committee could handle the entire inquiry, without any members of the upper, unelected House of Lords.

The Lords later voted down a Labour motion seeking a judicial inquiry by 251 to 197.

‘Most Afraid’

Osborne argued today that he was helping Labour by not holding a judicial inquiry. “The people who will be most afraid of where any inquiry goes are the people who were in charge at the time,” he told the BBC. “No one more than me would like to see Ed Balls in the dock.”

Labour leader Ed Miliband said Cameron would be “failing to understand both the gravity and scale of this crisis” if he didn’t change his position. “This is about much more than one individual, it’s about the culture and practices of the banking industry,” he said. “We’ve got to seize this moment.”

Judge Brian Leveson’s inquiry into media ethics has proved uncomfortable for the government. It has seen a third of the Cabinet questioned under oath and the publication of private text messages between the premier and media executives.

In terms of the possible scope of Tyrie’s investigation, the Commons Culture Committee began looking this time last year at how it came to be misled by News Corp. over the extent of phone hacking at the News of the World newspaper. It called 11 witnesses, finishing hearings in November, and didn’t report until the end of April of this year. It split along party lines over its conclusion that News Corp. Chairman and CEO Rupert Murdoch wasn’t a fit and proper person to run a company.

“It’s pretty rare for committees to split,” Conservative lawmaker David Davis told Sky News television. “That was unusual.”

Cameron’s office said yesterday the joint committee’s wider inquiry would have the power to force witnesses to appear and give evidence under oath. A government paper published in April said while such powers, along with the power to fine or imprison witnesses for contempt, have existed historically, they’re “untested in recent times.” The Commons hasn’t levied a fine on a non-member since 1666.

Osborne said former Labour ministers would also be called to testify.

Download: U.K.'s Osborne on Diamond Resignation

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