Labour ‘leaned on bank to fix rates’

Mr Osborne said the former Prime Minister’s inner circle, including current shadow chancellor Ed Balls, had “questions to answer” over apparent pressure on Barclays to post lower Libor rates during the credit crunch.

The comments – in an interview for Spectator magazine – came as Bob Diamond insisted he could not shed any light on the identity of “senior Whitehall figures” who suggested the rates were too high.

Giving evidence to the Treasury Select Committee, the former chief executive said Bank of England deputy governor Paul Tucker had relayed the concerns to him in a phone call in October 2008.

Mr Diamond said he believed Mr Tucker was trying to warn him that “there are Ministers in Whitehall who are hearing that Barclays is always high, that could lead to the impression that you are not funding yourself”.

But he added: “My recollection is Paul did not mention who he was referring to or I would have put it in the note.”

Pressed by Tory Michael Fallon on whether Mr Tucker could have meant the then Cabinet Office Minister Baroness Shriti Vadera, Mr Diamond said he would only be “speculating”.

Both Mr Balls and Lady Vadera have denied speaking to Mr Tucker about Libor.

But 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 instructing 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.”

Mr Balls told the BBC: “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.

“I had no conversation with anybody about the Libor market during any of those periods and at no point, in any of the time that I was a Minister or an adviser, were concerns raised about the Libor market from the FSA, the Bank or the Treasury to me.

“The idea that I have an issue on this... is completely false and untrue... and I would be very happy to say that to an inquiry.”

Lady Vadera also rejected claims that she authored a Treasury note titled “Reducing Libor” but insisted that it dealt with entirely legitimate government concerns.

“I did not have a conversation with Paul Tucker about Libor,” she said. “I did not have the conversation that is being alleged and I didn’t write that note.

“I commented on the note, in particular to focus the issues on the lending conditions in the real economy for real people.”

Asked if anyone in government had suggested that the rate should be manipulated, she said: “I can only speak for myself. I can’t obviously speak for everybody in government.”

Shadow Treasury Minister Chris Leslie said: “This is desperate stuff from George Osborne – lashing out in a frenzied way that demeans the office of the Chancellor of the Exchequer. It’s now increasingly clear that he isn’t interested in getting to the truth, only in playing party politics and throwing around false allegations with no evidence.”

Comment: Page 12.