Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

UK Politics

Labour 'involved in Libor scandal,' claims George Osborne


Members of Gordon Brown's government were “clearly involved” in the scandal of Barclays' manipulation of its Libor rate, Chancellor of the Exchequer George Osborne has claimed.

In an interview for tomorrow's edition of The Spectator, the Chancellor said that Mr Brown's inner circle - including current shadow chancellor Ed Balls - have "questions to answer" about their role in the false posting of inter-bank lending rates during the bank crisis of 2008.

Tories have been pointing the finger of blame at Labour figures including Mr Balls and former Treasury minister Shriti Vadera over claims that "senior Whitehall figures" pushed for the bank not to report such high rates.

A memo released by Barclays records a phone conversation which chief executive Bob Diamond had in October 2008 with Bank of England deputy governor Paul Tucker, who allegedly relayed Whitehall concerns over why Barclays was always towards the top end of Libor pricings, adding that the bank's rate did not "always" need to appear so high.

Both Mr Balls and Lady Vadera have denied speaking to Mr Tucker about Libor.

But Mr Osborne told The Spectator: "As for the role of the Labour government and the people around Gordon Brown - well I think there are questions to be asked of them."

And he added: "They were clearly involved and we just haven't heard the full facts, I don't think, of who knew what when."

The Chancellor insisted that the Bank of England itself had been cleared of having instructed Barclays to fiddle its rate.

This charge has been "specifically addressed, not just by our own investigators at the Financial Services Authority but also in the US Department of Justice", said the Chancellor.

"And they are not people who will pull their punches, and they're very clear that the Bank did not issue instructions to Barclays to cut its Libor rate."

In an interview before the publication of Mr Osborne's interview, Mr Balls told the BBC: "At no point did I have any conversations with Mr Tucker at all at any time when I was a Treasury minister and Treasury adviser or, subsequently to that, when I was a Cabinet minister.

"I had no conversation with anybody about the Libor market during any of those periods and at no point, in any of the time that I was a minister or an adviser, were concerns raised about the Libor market from the FSA, the Bank or the Treasury to me.

"The idea that I have an issue on this... is completely false and untrue... and I would be very happy to say that to an inquiry."

Lady Vadera also rejected claims that she authored a Treasury note titled "Reducing Libor" but insisted that it dealt with entirely legitimate government concerns.

"I did not have a conversation with Paul Tucker about Libor," she told BBC Radio 4's The World at One.

"I did not have the conversation that is being alleged and I didn't write that note.

"I commented on the note, in particular to focus the issues on the lending conditions in the real economy for real people."

Asked if anyone in the Labour government had suggested to the Bank of England that the rate should be manipulated, she said: "I can only speak for myself. I can't obviously speak for everybody in government.

"You asked me if Libor was a concern and of course it was a concern. There is nothing wrong with concerning yourself with access to credit. That's the job."