Labour defeated over banking probe

Western Telegraph: Labour party leader Ed Miliband wants a judge-led inquiry into banking Labour party leader Ed Miliband wants a judge-led inquiry into banking

Ed Miliband has vowed to continue fighting for an independent inquiry into the banking scandal despite MPs rejecting the demands.

The Labour leader said that while the party would co-operate with the parliamentary investigation, its remit was too "narrow" and a judge-led probe was still needed.

Mr Miliband also defended the conduct of Ed Balls after the Shadow Chancellor engaged in a bitter war of words with his opposite number George Osborne in the Commons.

It followed an interview with the Spectator where Mr Osborne said former prime minister Gordon Brown's inner circle had "questions to answer" over apparent pressure on Barclays to post lower Libor rates during the credit crunch.

Mr Balls, demanding an apology, accused the Chancellor of acting in a "cheap and partisan" way and claimed he had demeaned his position. But Mr Osborne 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".

Mr Miliband insisted he was "not afraid" of the party's past, telling the BBC: "Look, it is not a great advert for politics but when you have got a Chancellor of the Exchequer who is throwing around allegations that he then can't substantiate I think it is only right that the shadow chancellor says, 'Look, if you have got some evidence, bring it forward'."

He added: "I think this narrow inquiry will be inadequate. We will co-operate with it because Parliament has voted that way and therefore, I think it is the right thing to do. I'm not going to defy the will of Parliament. But I will continue to press my case for the open inquiry I think we need because I think it is still what the circumstances demand."

Labour and Westminster's minority parties wanted an independent "forensic" judicial public inquiry, claiming it is the only way to restore public faith in the disgraced industry. But the coalition insisted a parliamentary investigation was the best way to get speedy recommendations that could be included in a banking reform Bill early next year.

Next week Bank of England deputy governor Paul Tucker and Barclays chairman Marcus Agius, who announced his intention to resign after a replacement for chief executive Bob Diamond is found, will give evidence on the rate-rigging scandal, the Treasury select committee announced.

Barclays was dealt another blow earlier in the day as agencies Moody's and Standard & Poor's downgraded their outlook for the bank's credit rating in the wake of Mr Diamond's departure.

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