Bloody scenes at Battle of the Inquiry

The battle over the format of the inquiry into banking is turning into an unlikely and very bloody political battlefield. Listening to some senior Tories you could easily think they were on a mission to kill off  Ed Balls politically. They sound convinced they can link him to murky government links with Barclays and generally get some lost ground back after the omnishambles budget. Ed Balls says it’s all ridiculous as he was schools minister at the time of the Libor scandal. The Tories say Alistair Darling’s own memoirs talk of Ed Balls running a shadow treasury operation throughout the period.

If you think the banking problems are slightly getting lost in all this you may have a point. The slug-fest is ostensibly about whether the right way to inquire into Libor and related scandals is through an all-party parliamentary committee or a judge-led inquiry. It has become about who speaks for Britain, who is most linked to the dark days when banks were allowed to do what they liked and who is left standing by the end of the week.

So what happens on Thursday when Labour loses the vote on whether the banks should be pursued by a judge or by politicians? The vote on the judge-led inquiry will fall and then Labour will either abstain or vote against the chancellor/PM idea of a Lords/Commons committee. Then what? Labour could boycott the resulting committee or join in complaining that it’s inadequate and reap rewards when, at some point, it looks inadequate.

I get the impression after a few chats today that Ed Miliband himself is the one even more wedded to the defiant strategy than anyone else. Some will accuse him of being equally political, determined to repeat or build on his Murdoch triumphs last summer and to stay consistent to his predator/producer cultural analysis of British economic ills.

One Tory MP just said to me he thought it was the chancllor who was “playing politics” – ” he fired a pea shooter at them in the playground and is showing pig-headed arrogance” (not a great admirer of the chancellor, this particular Tory MP).

I thought some Lib Dems might be getting a bit squeamish at all of this but one senior Lib Dem source sounded ready for a bit more blood yet. He spoke of resentment at all the years when Labour was pro-deregulation and Vince Cable was a lonely voice against it. He agreed though that  we were watching a “highly political slug-fest”.

Faisal Islam was explaining tonight about how the FSA and the Bank of England told Bob “Red” Diamond that he should go. I understand that Mervyn King made a check call to George Osborne just before his phone call to “Red” last night. Given the bank’s independence, I presume there was never a question of the chancellor giving the heave-ho the thumbs up or down … but Mervyn King’s “time to go” call went ahead and it is pretty clear the chancellor didn’t plead with him not to go ahead with it.

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