By Matthew Barrett
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7pm update: Labour will support Andrew Tyrie's chairmanship of a joint parliamentary committee holding an inquiry into the banking industry. Ed Balls told the House after losing tonight's vote (below):
"The Government has won its vote. The chair of the Treasury Select Committee will now chair a narrow inquiry… On this side we respect the Right Honourable Member and we will work with him. But we have some very real concerns about the membership and the secretariat of that committee, which we hope that he will address."
The debate in the House regarding "professional standards in banking" has just wound down. At stake was a vote on whether there should be a judicial or a parliamentary inquiry into the culture of the banking industry. Labour favours the former drawn-out, Leveson-style inquiry, whereas the Government favours a swift investigation by Lords and MPs, so that any recommendations can be implemented in the upcoming banking reform Bill, which is set to come before the House in the new year. The Government won the vote to reject a judicial inquiry by 320 votes to 239, a safe majority of 81, and then won a second vote to hold a parliamentary inquiry, by 330 votes to 226 votes, an even safer majority of 104.
That all sounds a bit dry compared to the barney which took place between Ed Balls and George Osborne. Mr Osborne made comments to the Spectator which, Mr Balls argued, implied that Balls was involved in the Libor scandal. Mr Balls was incensed with the allegations. He called them "utterly baseless", urged Mr Osborne to "put up" the evidence of any wrongdoing from Balls, or "shut up", and attacked the…
"cheap and partisan and desperate way in which he and his aides have conducted themselves over recent days does him no good, it demeans the office he holds and most important it makes it harder to achieve the lasting consensus that we need"
Mr Osborne did not feel the need to supply an apology. This annoyed Mr Balls even more. He said: "the sight of a Chancellor who says one thing to the press, but can't defend himself in Parliament, is embarrassing to the office." It was a more rowdy affair than most PMQs – there were frequent interventions from the Deputy Speaker, the Tory MP Nigel Evans, as much of the House felt the need to shout at each other.
Once talk of the Spectator quotes died down and the substance of the issue was approached, Mr Balls said Labour would continue to push for a judge-led independent inquiry even if the Government won the vote. Mr Balls and Mr Osborne could not compromise on the issue, as is often the case. Mr Balls would "put off the moment when we actually investigate what happened" if we were to have to a long judicial inquiry, Mr Osborne said. Mr Balls, on the other hand, did not think a parliamentary inquiry would be fully independent, or be able to drag up as much detail as a judicial inquiry would.
There were some good backbench contributions, which will be returned to in due course, but two interesting moments are worth noting now. Firstly, Andrew Tyrie, the widely-respected and independent-minded Tory chair of the Treasury Select Committee essentially said he would not chair a new parliamentary inquiry into banking unless he had support from both frontbenches – it is not yet entirely clear whether he will have that support.
Secondly, Dominic Grieve, the Attorney General, appeared to undermine the Government's argument that a parliamentary committee would be able to hold a quick inquiry. He told Mrs Balls:
"It's quite clear from what you have said that you desire that the preliminary part of your judicially-led inquiry should produce recommendations on the lessons to be learnt from the scandal of the manipulation of the Libor as quickly as possible and by the end of the year. I simply say this to you; if there is to be a criminal investigation and that isn't a matter in my hands or in the hands of anybody in this House, then I have to say the idea you can run such an inquiry in tandem with a criminal investigation is, I am afraid, impossible."
Mr Balls asked if the same argument would apply to a parliamentary inquiry. Mr Grieve replied:
"If I may say to you, you are correct in that. It could present such a difficulty."