Miliband's call for a judge-led inquiry gathers strength

MPs' failure to land a blow on Bob Diamond has bolstered the case for a full inquiry.

It was Lib Dem MP John Thurso's comparison of Bob Diamond with Geoffrey Boycott ("You have been occupying the crease for two and a half hours and I am not sure we are any further forward") that was the defining moment of yesterday's select committee hearing. Put simply, the bowlers weren't up to the job. Their ineptitude exemplified precisely why we need a judge-led inquiry into the Libor scandal.

The Commons will vote today on whether to hold a parliamentary inquiry (the government's preferred option) or a judicial inquiry (Labour's preferred option), with the coalition's sizeable majority almost certain to ensure that MPs back the former. Andrew Tyrie, the chair of the Treasury select committee, has indicated that he will refuse to preside over an inquiry that does not enjoy cross-party support, but today's Financial Times reports that George Osborne, on this occasion, has prepared a plan B. Should Tyrie refuse to chair the inquiry, John McFall, the former Labour chair of the committee, will be asked to lead it instead. McFall will only accept the post with Miliband's blessing, but the offer of a Labour chair will make it harder for Miliband to withhold his support.

Yet George Osborne's evidence-free assertion that Labour ministers were "clearly involved" in the rate-rigging scandal means that consensus could prove elusive. It's worth noting that Miliband isn't the only one banging the drum for a judicial inquiry. The Daily Mail, one of the few papers with the capacity to shift government policy, reaffirms the case for "a proper judge-led public inquiry" in its editorial column today. Indeed, the paper seconds Miliband's proposal of a swift inquiry into the Libor scandal (to report by Christmas), followed by a second year-long inquiry into the wider "culture and practices" of the City of London.

As I suggested yesterday, the unending argument over which party called for the least regulation, matters less than who is seen to have the right policy now. One of Cameron's biggest problems is that he leads a party that voters see as far too close to the banks (a party "bankrolled by the banks", in Miliband's words) and other vested interests. It is one that his opposition to a judge-led inquiry (backed by 75 per cent of voters, according to YouGov) will only increase.

Former Barclays chief executive Bob Diamond leaves Portcullis House after appearing before the Treasury Select Committee. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.