Osborne 'need not apologise' over Balls Libor-fixing accusation, says Cameron

David Cameron does not believe that Chancellor George Osborne needs to apologise for suggesting that former Labour ministers including Ed Balls were involved in the Barclays rate-fixing scandal, the Prime Minister's spokesman said today.

Labour is demanding an apology after Bank of England deputy governor Paul Tucker denied yesterday that any minister or Whitehall official encouraged him to "lean on" Barclays to lower its submissions to the crucial Libor index.

Conservative MP Andrea Leadsom, a member of the Commons Treasury Committee which heard Mr Tucker's denial, said Mr Osborne had clearly made a mistake and should now apologise.

And Tory former chancellor Lord Lamont said Mr Osborne had "overplayed his hand". Lord Lamont told BBC2's Daily Politics: "If there is an allegation Ed Balls was involved, it doesn't stand up. That is clear."

Mr Cameron's official spokesman was asked at a regular media briefing this morning whether the Prime Minister agreed it was time for the Chancellor to say sorry.

The spokesman said: "The Treasury has been making the position clear that he won't. He (Mr Cameron) agrees with the Treasury."

Speaking to The Spectator magazine last week, Mr Osborne said that figures around Labour's former PM Gordon Brown were "clearly involved" in efforts to persuade Barclays to understate the interest rates it was being charged in 2008, at the height of the financial crisis. The claim sparked a furious clash in the House of Commons, where Mr Balls said he had been falsely accused of such behaviour "not on the basis of evidence but purely in the hope of political advantage".

The Chancellor told the Spectator that members of Mr Brown's inner circle had "questions to answer", adding: "My opposite number was City minister for part of this period and Gordon Brown's right-hand man for all of it. So he has questions to answer as well. That's Ed Balls, by the way."

Mr Osborne did not mention any other individuals by name, but it was widely assumed that he was referring to former Treasury minister Baroness Vadera, a close ally of the ex-prime minister.

But in his evidence to the Treasury Committee yesterday, Mr Tucker said he "absolutely" rejected claims that Mr Balls, Lady Vadera or the then Downing Street chief of staff Sir Jeremy Heywood had asked him to pressure Barclays to lower its Libor submissions.

Ms Leadsom later said that the deputy governor's evidence had "completely squashed" Mr Osborne's allegations.

"Obviously he made a mistake and I think he should apologise," she told BBC Radio 4's The World Tonight.

"I think it was a very valid discussion at the time about who knew what and it has now been completely squashed by Paul Tucker."

Labour Treasury spokesman Chris Leslie described Mr Tucker's evidence as "the final nail in the coffin of the Tory smear campaign the Chancellor led last week" and called on Mr Osborne to apologise.

But Foreign Secretary William Hague dismissed the demand, telling BBC Radio 4's Today programme: "Parliament is a lively place and it should be, it's a free Parliament.

"The Chancellor said there are questions to answer, there remain questions to answer and I see no reason why he should apologise for that."

PA