Ed Balls, the U.K. Labour Party’s top Treasury spokesman, demanded Chancellor of the Exchequer George Osborne withdraw allegations linking him to manipulation of the London interbank offered rate and called for a full judge-led inquiry into the scandal.
Balls said allegations made by Osborne in this week’s Spectator magazine that he leaned on the Bank of England to pressure Barclays Plc to lower their submissions to set Libor in 2008 were “baseless.” He said only a judicial probe would “persuade the public” it was not partisan, rather than the parliamentary inquiry the government is proposing.
“We need the inquiry to be thorough and genuinely cathartic or else we will be here again,” Balls told the House of Commons in London today.
Lawmakers vote this afternoon on the type of inquiry to be held into Barclays’s Libor-rigging, determining how deeply to examine the issue and how quickly changes to the law may follow. The battle to set the terms of the inquiry underscores the political effort to assign blame between the two main parties.
The Commons is debating two motions, one seeking the judge-led inquiry into the banking industry sought by opposition Labour Party leader Ed Miliband and the other backing the six-month-long lawmaker-led probe focused on Libor favored by Prime Minister David Cameron. Voting is scheduled for around 5 p.m. in London.
Osborne said in the Spectator that people close to former Prime Minister Gordon Brown, for whom Balls worked as an aide before becoming a minister in the previous administration, “were clearly involved” in the Libor affair and that “we just haven’t heard the full facts.”
“My opposite number, who was the City minister for part of this period and Gordon Brown’s right-hand man for all of it, so he has questions to answer,” Osborne told the magazine. “That’s Ed Balls by the way.”
Osborne “cannot defend here what he whispers to the Spectator,” Balls said of the allegations. “He has no evidence and he knows it.” The Labour lawmaker said Osborne “should either present the evidence or withdraw the allegation against me right now.”
Miliband’s party is likely to lose the vote, as the Conservatives’ junior coalition partners, the Liberal Democrats, vote with Cameron’s Tories. If he loses, Miliband must decide if he will refuse to participate in the lawmaker-led inquiry.
“Will the Labour Party take part in it?” Osborne asked opposition lawmakers today. “If not, you will be blocking any inquiry into this banking scandal.”
Cameron has named Conservative lawmaker Andrew Tyrie to lead the probe he has proposed. Seeking to avoid the appearance of an establishment whitewash, Tyrie said he would not proceed without Labour support.
“Confidence in banking is very low,” Tyrie told Parliament, defending the case for a rapid parliamentary probe. “This is bad for Britain.”
Tyrie, a former adviser to John Major and Nigel Lawson when they were chancellors and a lawmaker since 1997, described the Libor scandal as “the worst case of City malpractice I can recall.”
Barclays, the U.K.’s second-largest bank by assets, was fined a record 290 million pounds ($453 million) on June 25 for rigging Libor, a global benchmark. Chairman Marcus Agius, Chief Executive Officer Robert Diamond and Chief Operating Officer Jerry Del Missier subsequently resigned. Agius is staying on while a successor to Diamond is found.