Labour calls for Libor inquiry

Labour will call for a judge-led inquiry into the Libor scandal in the House of Commons tomorrow.

The Party will table a motion saying "the Government should commission an independent, forensic, judge-led public inquiry under the Inquiries Act into the culture and professional standards of the banking industry."

The motion has support from a number of minor parties including the DUP, SNP, SDLP, Plaid Cymru and Greens. Earlier in the day at Prime Minister's Questions, David Cameron and Ed Miliband clashed over the Government's plans to investigate the banking industry.

Mr Miliband demanded a "judge-led approach" while the Prime Minister insisted the Government’s parliamentary inquiry would be "swift and decisive".

The Labour leader called for "a two-part inquiry with a judge completing on the Chancellor’s timetable by Christmas on Libor and then looking at the wider issues – and there are many issues - about the culture and practices of the City".

Labour members of the Treasury Select Committe that questioned Mr Diamond joined Mr Miliband in his call.

Pat McFadden said: "There may be other banks that have done similar things here as the investigations go on, and I think that what's been exposed here raises wider questions."

"So I think there's a case for a broader inquiry."

Committee Chairman Andrew Tyrie said he was unprepared to chair a Parliamentary Inquiry without Labour support.

“I am not prepared to participate in a parliamentary inquiry unless I feel I have the support of the House of Commons and if one of the major parties says they are not happy with it then I clearly don’t have the support of the House of Commons.”

Mr Cameron also upped the pressure on Mr Diamond by saying it would be "completely wrong" for him to take a big payoff after resigning as Barclays chief executive.

Meanwhile, Chancellor George Osborne has raised the heat in the debate over Libor by claiming that members of Gordon Brown's government were "clearly involved" in manipulating the interbank lending rate.

In an interview with the Spectator, to be published tomorrow, the Chancellor says: "They were clearly involved and we just haven’t heard the full facts, I don’t think, of who knew what when."

In response, Labour has accused Mr Osborne of "desperate stuff that demeans the office of the Chancellor".

Mr Osborne claims his opposite number Ed Balls, who served as City Minister under Brown, has "questions to answer" about the scandal. But he insists that both the Financial Services Authority and the US Department of Justice have shown the Bank of England "did not issue instructions to Barclays to cut its Libor rate".

Chris Leslie, Shadow Treasury Minister, hit back: "This is desperate stuff from George Osborne – lashing out in a frenzied way that demeans the office of the Chancellor of the Exchequer. It’s now increasingly clear that he isn’t interested in getting to the truth, only in playing party politics and throwing around false allegations with no evidence."

Bob Diamond gave evidence to the Treasury Select Committee today, when he also implicated government ministers in the scandal.

Explaining the phonecall between himself and Paul Tucker, from the Bank of England, Mr Diamond told MPs: “What he was trying to tell me is ‘Bob, there are ministers in Whitehall who are hearing that Barclays is always high, that could lead to the impression that you are not funding yourself.’”

Lord Myners and Shriti Vadera - two leading figures in the Brown government - have denied any involvement in the scandal, however.

Mr Tucker has personally requested to appear at the Treasury Select Committee to give his side of the story.

At the hearing today, Mr Diamond also claimed he felt “physically sick” when he read some of the emails from Barclays traders who had been fixing the Libor rate, and revealed he only found out the findings from the FSA “four or five days” before they were published.

He batted off questions about whether or not he would take his bonus, saying it was a matter for the board of the bank.

You can catch up on all the action from today's PMQs and committee hearing from our liveblog.