We're powerless to get truth about bankers, says key MP

Diamond faces recall to Parliament – but Select Committee member says inquiry isn't working

Politicians have been virtually "useless" so far at getting to the truth behind the banking scandal, one of the MPs responsible for investigating the affair has admitted.

Andrea Leadsom, whose forensic questioning of the former chief executive of Barclays, Bob Diamond, led to his only uncomfortable moments during last week's cross-examination by the Commons Treasury Select Committee, said: "I don't think we felt we did a fantastic job. It's a fair criticism to say, 'You guys were useless'.

"We had great weaknesses in that we didn't have email trails. We didn't have recordings of the morning meetings where you could point to what had been said. All we really had were the regulators' reports, what we'd seen in the media."

Her frank remarks, in an interview with The Independent, will raise doubts about whether the larger parliamentary inquiry being set up to investigate the banking scandal will be able to uncover the whole truth. David Cameron has rejected Labour's calls for a judge-led inquiry, arguing that it would take too long. Several of the MPs who questioned Mr Diamond last week are now considering calling him back for a second bout because they are dissatisfied with his answers.

Paul Tucker, the Deputy Governor of the Bank of England, will be questioned by the same committee today about the now-infamous telephone call he had with Mr Diamond at the height of the banking crisis in 2008. Any clash between his evidence and Mr Diamond's will add to the pressure for the former Barclays head to be recalled.

One of the committee members, Pat McFadden, who was a business minister under Labour, said: "I can see that happening [Mr Diamond being recalled] after we have talked to other witnesses. There were some inconsistencies in what he told us. We'll ask Tucker if his version of the phone call tallies with Bob Diamond's."

Ms Leadsom complained that she found parts of Mr Diamond's evidence "simply unbelievable", while John Mann, another Labour member of the committee, said that he "may not have been entirely honest in his answers".

The Labour leader, Ed Miliband, will today promise to introduce major reforms of the banking industry in an attempt to improve competition and change its culture.

Tomorrow the Treasury Select Committee will ask the outgoing Barclays chairman, Marcus Agius, about the state of mind of executives who thought it was acceptable to rig interest rates. He can also expect to come under pressure not to allow Mr Diamond his full pay-off, reputed to be £17m. The Business Secretary, Vince Cable, told the BBC yesterday that the public would regard it as an "outrage".

The shadow Chancellor, Ed Balls, added: "It's outrageous that somebody should stand aside because the board decides that there's a problem and then get a payout which is sort of off the scale for anything normal people will earn in their lifetimes. How can that be?"

Deputy Questions

The Deputy Governor of the Bank of England, Paul Tucker, will today be asked by MPs about the phone call with Bob Diamond, the Barclays' chief executive, on 29 October, 2008, following Mr Diamond releasing his memo of the call. He will be asked whether he sanctioned Barclays and other banks submitting artificially low estimates of their borrowing costs at the height of the financial crisis.