Parliament to choose between Labour and Tory plans for rate-fixing inquiry

Cameron responds to deadlock over whether judge or politicians should examine scandal

David Cameron will move to break the political deadlock over how the rate-fixing scandal should be investigated by forcing the issue to a vote in the House of Commons tomorrow.

The Prime Minister announced plans on Monday to put senior parliamentarians, rather than a judge, in charge of the inquiry into the manipulation of interest rates by bankers.

But Labour is insisting the issues involved are so serious they have to be scrutinised by an independent inquiry free of politicians – and is refusing to promise to take part in a parliamentary inquiry.

Tensions have also been raised by attacks by Mr Cameron and George Osborne, the Chancellor, on the previous Labour administration for allowing the abuse of interest rates to develop on its watch.

The Government's problems were further heightened by the warning by Andrew Tyrie, the Tory MP chosen to head the inquiry, that he would pull out if his investigation was not supported by all parties. He said: "I am certainly not going to want to run an inquiry that is in any sense partisan or perceived to be partisan."

MPs will be asked to choose tomorrow between the alternatives of a parliamentary investigation, as proposed by the Coalition, or the judge-led inquiry advocated by Labour.

The Government looks certain to win a majority for the former and ministers would then urge MPs of all parties to close ranks and co-operate with the committee investigation.

Downing Street insisted the Government was committed to an all-party inquiry and suggested it could have a wider remit than expected.

A senior Labour source said: "This is a Government in retreat; 48 hours ago we did not have an inquiry and 24 hours ago we did not have a vote. Now David Cameron must go one step further and have an independent, judge-led inquiry."

Labour refused to be drawn on whether it would co-operate with the parliamentary inquiry if it loses tomorrow's vote, insisting it could still harness public opinion to defeat the Government on the issue.

Ed Balls, the shadow Chancellor, insisted he had not given up hope of persuading ministers to accept a judicial inquiry. He said: "We need as politicians to say: 'look we all got this wrong, there needs to be big change'.

"And we can only do that in the open scrutiny of proper hearings with proper disclosure from the politicians and the bankers."

Mr Osborne said the judge-led inquiry favoured by Labour would take two years to set up and run and would not result in legislation until 2016-17.

"It is not what the country wants. A proper parliamentary inquiry with real powers to hold evidence under oath [will] get some answers in the next few months instead of waiting until a decade after the scandal itself. So let's get on with the job," he told BBC Radio 4.

Simon Hughes, the Liberal Democrat deputy leader, said: "A judge-led inquiry into banking should now not be the priority. The failures of the banking system and specifically the attempt to fix interest rates comes after a successful investigation by the regulator.

"For years people like my friend Vince Cable warned about the consequences of the gambling by spivs in the City."

A poll by TNS BMRB, a research agency, found 82 per cent of the public supported tighter regulation of the financial industry even if it resulted in some banks leaving Britain. Less than one-fifth believed the Government should be more careful in its comments because of the contribution banks make to the public finances.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Life and Style
Powdered colors are displayed for sale at a market ahead of the Holi festival in Bhopal, India
techHere's what you need to know about the riotous occasion
Arts and Entertainment
Larry David and Rosie Perez in ‘Fish in the Dark’
theatreReview: Had Fish in the Dark been penned by a civilian it would have barely got a reading, let alone £10m advance sales
News
Details of the self-cleaning coating were published last night in the journal Science
science
News
Approved Food sell products past their sell-by dates at discounted prices
i100
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Finance Assistant / Credit Controller

£16000 - £18000 per annum: Recruitment Genius: They are an award-winning digit...

Ashdown Group: Senior VMware Platform Engineer - VMware / SAN / Tier3 DC

£45000 - £55000 per annum + benefits: Ashdown Group: Senior VMware Platform En...

Recruitment Genius: Purchasing Assistant

£10000 - £16000 per annum: Recruitment Genius: A distributor of specialist ele...

Recruitment Genius: Sales Ledger Assistant

£17000 - £19000 per annum: Recruitment Genius: A distributor of specialist ele...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable