Osborne and Balls trade blows as MPs vote on bank inquiry

Probe will not be led by judge - but Labour win concession that legal guidance will be provided

The interest rate-fixing scandal provoked bitter personal exchanges in the Commons yesterday between George Osborne, the Chancellor, and his opposite number, Ed Balls.

The pair made little attempts to disguise their mutual animosity as they clashed repeatedly over Mr Osborne's suggestions that the shadow Chancellor had known about the manipulation of lending rates when in office.

Mr Balls denied any involvement and claimed Mr Osborne's conduct "demeaned" the office of Chancellor. "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," he said.

Mr Balls called on him to withdraw the "false, personal accusations" which were made "purely in the hope of political advantage". But Mr Osborne hit back, and called on Mr Balls to "explain what Labour's involvement was, who were the ministers?; Who had the conversation?; Who were the senior figures?" and said he had to "answer for his time in office".

After the frequently ill-tempered debate, Labour backed down after losing a vote on holding a full public inquiry into the scandal and agreed to work with the Government on a more limited parliamentary investigation into the manipulation of the Libor rate.

Mr Balls said Labour would accept the limited Parliamentary inquiry but added it believed the case for a "full, open judge-led public inquiry" was still necessary and it would "continue to press that case". "The Prime Minister and the Chancellor have made a very grave error of judgement," he said.

The vote on the inquiry came as Barclays enlisted Tony Blair's former adviser Tim Allan to help deal with the crisis engulfing the bank over the Libor interest rate-fixing scandal.

Mr Allan, the founder of Portland Communications, had been hired on a "corporate reputation" brief at Barclays but has now been pulled in to provide advice on handling the fall out from the £290m fines imposed as a result of the scandal.

There were also signs growing fury in the Square Mile at what is seen as "unfair treatment" of the bank and former chief executive Bob Diamond, pictured. Investec analyst Ian Gordon encapsulated the fury in a strongly-worded note accusing expenses-tainted MPs of hypocrisy for attacking bankers' misdeeds. He wrote: "Notwithstanding that the current members of the Treasury Select Committee are (in our view) all of unquestionable integrity, there is a slight irony that these representatives of an organisation with such a rich criminal tradition were interrogating Barclays where less than 0.01 per cent of staff have been accused of attempted Libor manipulation in relation to which (thus far) no criminal charges have been brought."

The Leader of the House, Sir George Young, has agreed to provide the inquiry into the scandal with the services of senior legal counsel. Government sources later confirmed that it was possible that this could result in a QC asking questions in a similar role to that of Robert Jay in the Leveson Inquiry.

Members of the Treasury Select Committee who questioned Mr Diamond this week had been criticised for the lack of forensic examination of the former Barclays chief executive.

Details of the new investigation will be hammered out between the main parties in the next few days. "We've got to sit down with the opposition and establish how this will work," a government source said. "There is a lot to do."

Picky about their clients? The new PRs

Founded in 2001 by Tim Allan, a former adviser to Tony Blair, Portland Communications grew rapidly from a small team of four into an international firm with offices in Nairobi and New York, representing multinational corporations and national governments.

The firm has drawn criticism both for its methods and for the clients it has chosen to represent.

Among those that have sought the services of Portland to improve their image are the governments of Russia and Kazakhstan, as well as international brands such as Stella Artois and McDonald's. The firm attracted particular criticism for representing Kazakhstan, after winning a contract said to be worth as much as £1m a year in 2011. The government of President Nursultan Nazarbaev, the dictator of the oil-rich former Soviet country, was accused in the same year of a litany of human rights abuses, including the detention of activists, and tight control over freedom of assembly, religion and media.

The company has also worked directly for the Kremlin, providing advice on relations with the UK parliament and advising on handling negative stories.

As well as its roster of clients, Portland has also been criticised for its methods.

Earlier this year, the firm was accused of editing the Wikipedia pages of its clients to make them more favourable. This included a claim by the Labour MP Tom Watson that Portland removed unfavourable references to Stella Artois as "wife-beater" from a Wikipedia page.

In April this year, Mr Allan – who reportedly turned down an offer from Mr Blair to become the government's director of communications and strategy in 2005 – sold his majority stake in the company he founded to the US marketing services company Omnicom in a deal thought to be worth as much as £20m.

A month later, the company announced that another of Mr Blair's advisers, the former Downing Street communications chief Alastair Campbell, was joining as a consultant.

Suggested Topics
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Arts and Entertainment
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Life and Style
The Commonwealth flag flies outside Westminster Abbey in central London
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
Arts and Entertainment
tvWebsite will allow you to watch all 522 shows on-demand
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Community / Stakeholder Manager - Solar PV

£50000 - £60000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Senior Marketing Executive (B2B/B2C) - London

£32000 - £35000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

C# .Net Developer

£23000 - £35000 Per Annum: Clearwater People Solutions Ltd: C# .Net Develop re...

Electronics Design Engineer

£35000 - £45000 per annum + Benefits: Progressive Recruitment: My client are l...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor