Members of Gordon Brown’s government were “clearly involved” in the scandal of Barclays’ manipulation of its Libor rate, the Chancellor has claimed.
In an interview for The Spectator, George Osborne said that the former prime minister’s inner circle, including current shadow chancellor Ed Balls, have “questions to answer” about their role in the false posting of inter-bank lending rates during the bank crisis of 2008.
Tories have been pointing the finger of blame at Labour figures, including Mr Balls and former Treasury minister Shriti Vadera, over claims that “senior Whitehall figures” pushed for the bank not to report such high rates.
A memo released by Barclays records a phone conversation which then chief executive Bob Diamond had in October 2008 with Bank of England deputy governor Paul Tucker, who allegedly relayed Whitehall concerns over why Barclays was always towards the top end of Libor pricings, adding that the bank’s rate did not “always” need to appear so high.
Both Mr Balls and Lady Vadera have denied speaking to Mr Tucker about Libor. Mr Osborne told The Spectator: “As for the role of the Labour government and the people around Gordon Brown – well I think there are questions to be asked of them.”
And he added: “They were clearly involved and we just haven’t heard the full facts, I don’t think, of who knew what when.”
The Chancellor insisted that the Bank of England itself had been cleared of having instructed Barclays to fiddle its rate.
This charge has been “specifically addressed, not just by our own investigators at the Financial Services Authority but also in the US Department of Justice”, said the Chancellor.
“And they are not people who will pull their punches, and they’re very clear that the Bank did not issue instructions to Barclays to cut its Libor rate.”
However, Mr Balls insisted: “At no point did I have any conversations with Mr Tucker at all at any time when I was a Treasury minister and Treasury adviser or, subsequently to that, when I was a Cabinet minister.
Lady Vadera also rejected claims that she wrote a Treasury note titled “Reducing Libor”.