Page last updated at 09:31 GMT, Friday, 6 July 2012 10:31 UK

MPs reject Labour call for judge-led banks inquiry

In votes in the Commons on 5 July 2012, MPs rejected an opposition motion calling for an independent judge-led inquiry into banking standards and the Libor scandal, and backed the parliamentary inquiry favoured by the government.

A judicial inquiry was favoured by Labour, and the opposition motion had the backing of the DUP, SNP, Plaid Cymru, the SDLP, Green MP Caroline Lucas and Independent MP Lady Sylvia Hermon.

However, MPs rejected the motion by 320 votes to 239, a government majority of 81.

MPs then approved a government motion that "a joint committee of the two Houses ought to be established into professional standards in the banking industry" by 330 votes to 226, a majority of 104.

The debate and the two Commons votes followed a row about the type of inquiry to be held into the Barclays Bank rate-rigging scandal.

Opening the debate, shadow chancellor Ed Balls said he spoke on behalf of "five separate parties in this House".

During angry exchanges with Chancellor George Osborne, Mr Balls did concede: "We must all admit that [banking] regulation should have been tougher."

Mr Osborne told MPs: "The public is very, very angry about what happened."

He described the alleged practice of fixing the Libor rate at Barclays as "completely unacceptable" and said it represented "the triumph of private greed over public good".

The chancellor referred to the recent Treasury Committee questioning of former Barclays boss Bob Diamond as an example of parliamentary scrutiny being the right approach.

DUP Westminster leader Nigel Dodds, whose party backed the opposition motion, said: "It is a matter of public confidence and the public want to see an independent, judge-led inquiry."

On 2 July, David Cameron announced a full parliamentary inquiry, which would be headed by the chairman of the Commons Treasury Committee, Andrew Tyrie.

Speaking in the debate Mr Tyrie said he was "honoured" to be asked to chair inquiry and insisted that "terms of reference should be tightly drawn and forward looking - this cannot be a witch hunt".

He added that the parliamentary inquiry must have cross-party support, which the debate showed it did not have.

He also called for those involved in "disgraceful practices including the rigging of markets [to] face stiff penalties, including jail".

SNP Treasury spokesman Stewart Hosie backed the opposition motion but stated that "if we fail to get a judge-led inquiry, we will not stand in the way of a parliamentary inquiry".

Following the Commons votes, shadow chancellor Ed Balls said of the Tyrie enquiry: "We respect the right honourable member and we will work with him."

On Tuesday, the House of Lords rejected a Labour amendment to the Financial Services Bill, suggesting the banking probe should be run by a judge - as is currently happening in the Leveson Inquiry into media standards - and be independent of Parliament.

Peers voted by 251 votes to 197 against the amendment, a government majority of 54.

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