? ONS says recession deeper than originally thought
Here's the full text of Osborne's statement.
I'll post a proper summary shortly.
Osborne says the Conservatives voted against the tripartite City regulatory system set up by Labour (ie, the system involving the City being regulated by the FSA, the Bank of England and the government). Gordon Brown used to criticise him regularly for it, he says.
Labour's Dennis Skinner says the problems in the banks started in the 1980s. And he says Osborne should have gone on Newsnight to face questions from Jeremy Paxman.
Osborne says at least he is in the House of Commons, unlike Ed Balls. Labour, and Skinner, should apologise for what occured when Labour were in power, he says.
Osborne says it is hard to estimate how much the interest-rate manipulation cost consumers.
David Ruffley, a Conservative, asks how many other banks are under investigation.
Osborne says RBS and HSBC are under investigation. But other, foreign banks are being investigated too.
Alistair Darling says he thinks Osborne is kidding himself if he thinks the UK is the only country where this happened. This was symptomatic of a wider problem, he says.
He says the FSA does have powers to stop people responsible for these abuses working in banks.
Osborne says Darling is right to say the problem occurs in other countries. There is an investigation in London. But the Libor rate is set in London.
Osborne says the FSA is pursuing cases against individuals. But it would not be appropriate for Osborne to comment.
Barclays shares are now down 12%, Jill Treanor tells me.
Osborne is responding. He says MPs will be surprised Ed Balls is not here. Balls was City minister "every day" these abuses were occuring.
He says the FSA's criminal powers do not extend to criminal sanctions for manipulating Libor.
This is Labour's fault, he says.
The government is looking at criminal sanctions for market manipulation.
Under the current arrangements money paid in fines is just used to reduce the levy paid by other banks to the FSA.
The government is looking at changing this. And it is looking at whether it can ensure the fine paid by Barclays goes to the taxpayer.
Rachel Reeves, the shadow chief secretary to the Treasury, is responding for Labour.
She says Ed Balls is not here because he is addressing the Local Government Association.
This is one of the most serious abuses uncovered in the City, she says.
She says criminal prosecutions "should and must follow" against anyone who has broken the law.
What support will be available to anyone who lost out?
What is being done to ensure other offenders are bought to justice?
The reputation of the City is at stake, she says. Will Osborne revisit his decision not to regulate Libor arrangements? He could amend the financial services bill, she says.
Osborne turns to Bob Diamond. He has some "very serious questions to answer", he says.
Osborne says it is right that the Treasury committee is questioning Diamond soon.
Osborne turns to regulation.
Libor was not covered by Labour's regulatory act, he says.
Labour MPs heckle. Osborne tells them that they should shut up and listen.
As part of the government's review into Libor, it will examine the need for new criminal legislation.
Osborne says he cannot comment on whether there will be criminal sanctions in this case. The FSA are investigating every avenue they can follow. But criminal sanctions do not seem to apply to Libor manipulation, he says.
Osborne says that he will be asking the regulator whether the fine imposed on Barclays could be used to help the taxpayer, instead of being used to fund further City regulation.
Osborne is now addressing the first question.
The report into what happens reads like an epitaph to the age of irresponsibility.
But the government of the day did not have a clue as to what was going on.
Osborne says the FSA is clear that the worst abuses happened before the crash.
Barclays executives were in breach of their oblivations.
The tripartiite regulatory system failed "in war and in peace", he says. (He means in the crash, and before, I presume.)
George Osborne is making his statement.
He says Libor and Euribor are affect the interest rates paid by millions of people.
The Financial Services Authority has concluded that Barclays did not conduct its affairs properly. As a result of what it was doing, confidence in the UK's banking sector was threatened.
The FSA investigation is still going on. A number of institituions are involved.
The inquiry demonstrates "systemic failures" in the financial system.
It begs three questions.
First, how were these abuses allowed to happen? The worst happened before the financial crisis occured?
Second, what new regulation is needed?
Third, what further investigations are required?
Barclays shares are now down by more than 10%, my colleage Jill Treanor tells me. That's a big fall for a FTSE 100 company.
George Osborne will be making his Commons statement on the Barclays scandal shortly.
This is what happened when the call for a public inquiry (see 11.57am) was raised at the No 10 lobby briefing.
Asked if now time for a Leveson-style judicial inquiry into banks, No.10 said only that PM welcomes Treasury Select inquiry
? Paul Waugh (@paulwaugh) June 28, 2012
And the hypocrisy allegations are flying both ways. The BBC's Carole Walker has sent me this on Twitter.
@AndrewSparrow And Treasury source accuses Labour of "height of hypocrisy" over banking regulation as Ed Balls presided over "light touch".
? Carole Walker (@carolewalkercw) June 28, 2012
Should there be a public inquiry into banking ethics? Ann Pettifor thinks so. She launched an e-petition this morning calling for "an independent, judicial public enquiry into fraud, wrongdoing and ethics of British banks, their management and their staff, and the role of the British Bankers' Association", including the interest-rate rigging scandal. As I write, it's got 486 signatures on it.
Barclays shares are now down nearly 10%, my colleague Jill Treanor tells me. She says investors are clearly rattled by the political row that is erupting. Interestingly, other banks are being dragged down too, she says. RBS and Lloyds have also seen their shareprice fall by more than 5%. These three are the biggest falls in the FTSE 100.
A Labour source has just been on the phone to say that David Cameron's comment about Labour being to blame for the regulatory regime that allowed the Barclays scandal amounts to "huge hypocrisy" because, while Labour were in office, the Tories were complaining about there being too much City regulation.
He has sent me a series of quotes from George Osborne, David Cameron and other Tories from before the general election backing this up.
For example, here's David Cameron in a speech on the Conservative's economic strategy on 28 March 2008.
As a free-marketeer by conviction, it will not surprise you to hear me say that a significant part of Labour's economic failure has been the excessive bureaucratic interventionism of the past decade too much tax, too much regulation, too little understanding of what our businesses need to compete in the modern world.
The Lib Dem quote from Stephen Williams (see 11.20am) on the Barclays scandal was rather dry, but Tim Farron, the Lib Dem president, was much more colourful when he was interviewed about the scandal this morning. According to PoliticsHome, this is what he said:
There are 20 banks, it would appear, involved in this investigation . It seems the problem was systemic within the industry and I'm afraid a 'let off the leash' mentality by the last Labour government has lead to the culture of reckless greed that has crashed the UK and the European economies and millions of people are suffering as a consequence. Here is an example where criminality has even been entered into. This is an appalling practice and it's one that has to be tackled immediately.
Farron also said that "without wanting to say 'I told you so'", the Lib Dems did in fact tell us so.
Vince Cable, Ming Campbell, Charles Kennedy, Paddy Ashdown, all of them were raising these issues [the need for tougher City regulation] right the way through the 90s and the early part of the noughties.
With Barclays in the news, this is a good day to revisit an article that my colleague Felicity Lawrence wrote for the Guardian's Tax Gap series about the management culture at the bank. Here's an extract.
High stakes poker games, a "cow eating club", brutal sackings and a team-building exercise in which an executive was strapped into a mock electric chair.
This was at the heart of this week's legal battles over tax avoidance, according to whistleblowers. They paint a picture of life in which summary dismissal, ritual humiliation, and social events to match the tales of famous banking excesses in the 1980s, are the norm.
The sources say this management culture has been integral to creating what is in effect a tax avoidance factory at Barclays headquarters at Canary Wharf. Avoiding tax by exploiting legal loopholes was not seen as something questionable but rather the raison d'etre of the Structured Capital Markets department. "There's such a macho culture in SCM and the deals are so big you never say billion or million, you just say 16 bucks or 16 quid which meant billion," one source said. "The tax avoidance was so big it became the engine of growth for the whole of the investment banking arm."
The energy to keep creating new trades that could allegedly generate hundreds of millions in tax profits came in part from fear. Roger Jenkins, the chief executive of the SCM division, is said to have called in senior directors to announce that he was about to fire one of themon the basis of what deals they went out to do next. "It wasn't a joke, he meant it," the source said.
On several occasions, the sources allege, staff have come in to work to find an email from Jenkins saying a colleague no longer worked there. Sackings, which might be provoked by nothing more than failure to understand the unwritten rules of deference to the hierarchy, involved being marched out of the building by security guards.The office is reportedly rife with internal politics. In one example, a managing director who bought himself a Bentley was told by Jenkins that it was a very nice car, too nice in fact for Jenkins to want to see it outside the office. Thereafter the executive's chauffeur would drop him out of sight around the corner. According to one whistleblower, a secretary was fired by another executive for booking a taxi that was a Volvo rather than an S class Mercedes.
It's open season season on the bankers this morning. By now we've heard from David Cameron (see 11.09am) and two of his key rivals - Ed Miliband (see 10.35am) and Boris Johnson (see 10.14am).
Not to be outdone, the Liberal Democrats have also sent out their thoughts. This is from Stephen Williams, co-chair of the Lib Dem parliamentary Treasury committee.
Barclays has challenged the fundamentals of the British banking system. This is yet another symptom of the broken and poisonous banking system which Labour allowed to flourish.
A full investigation is needed to establish who knew and sanctioned this manipulation, with those found guilty fired on the spot. We need to restore public and market confidence in our banking system.
The Press Association has now filed some more quotes from David Cameron on the Barclays scandal. Here's a summary of what he's saying.
? Cameron said the Barclays scandal was "extremely serious" and that the Barclays management team had some "big questions to answer". This morning there were suggestions that Ed Miliband would call for Bob Diamond to resign. Cameron seems to be spreading the blame more widely.
This is a scandal. It is extremely serious. They've had a very large fine and quite rightly. But frankly the Barclays management team have some big questions to answer.
How did this happen? Who was responsible? Who's going to be held accountable for it? These are issues they need to determine and determine quite rapidly.
? He said that the investigation into what went wrong should continue. But, unlike Boris Johnson and Ed Miliband, he did not specifically talk about a criminal investigation.
In terms of what happens next, I would say that the regulator should use all the powers and means at their disposal to pursue this in the way they feel is appropriate.
? He blamed Labour for creating the regulatory framework that allowed the Barclays scandal to happen.
I would also make the point that this happened some years ago, under a previous government. The rules in place of a previous government.
? He said the government would consider toughening City regulation in the light of the scandal.
We are changing these rules and if there is more we can do to toughen them up, we'll take that action.
David Cameron has now weighed in on the Barclays scandal. This is what the Press Association has filed.
Prime minister David Cameron said today that Barclays Bank's management has serious questions to answer over allegations that it manipulated lending rates at which banks lend to each other.
Speaking during a visit to Todmorden, West Yorkshire, to inspect damage done by recent flooding, he was asked whether chief executive Bob Diamond should resign.
He said: "I think the whole management team have got some serious questions to answer. Let them answer those questions first.
"Who was responsible? Who was going to take responsibility? How are they being held accountable?"
Here is more from the Tory MP Matthew Hancock (see 10.21am) on the Barclays scandal. I've taken the quotes from PoliticsHome.
[Bob Diamond] has very serious questions to answer. He was in charge of the unit that did these things. He's since been promoted to run the whole bank, and I certainly hope that he'll go before the Treasury select committee, I understand that he will, and be held to account by parliament, because I want to hear the answers to those questions.It's all very well now saying that this is against the culture of Barclays but this is in charge of Barclays when it was clear there was a culture of acting in an utterly immoral manner.
I've just received the text of Ed Miliband's speech to the Unite conference.
This is what he's saying about the Barclays scandal.
? Miliband calls for the "strongest punishment" for those responsible for the interest rate rigging scandal.
This cannot be about a slap on the wrist, a fine and the foregoing of bonuses.
To believe that is the end of the matter would be totally wrong.
When ordinary people break the law, they face charges, prosecution and punishment.
We need to know who knew what when, and criminal prosecutions should follow against those who broke the law.
The same should happen here.
The public who are paying the price for bankers' irresponsibility will expect nothing less ...
We need the strongest punishment, a change in regulation and a change in the culture of our banks.
? He said the government should look urgently at the need to tighten regulation for banks. "We need to change the way things are run so that this can never happen again," he said.
? He said the "swaggering", selfish culture of the banking industry had to change.
This shines a light on a swaggering culture which is not about serving the public, but serving itself by whatever means necessary.Too many people in the banks clearly think they were big to fail, too powerful to be challenged.
They clearly believed they could do anything they liked and were above the law.
This is yet another example of some of the rich and powerful having their own moral standards, just as we saw during phone hacking.
We cannot have a country where this happens.
? He said the Barclays scandal vinidicated the speech he gave at Labour's conference last year attacking "irresponsible, predatory capitalism". This was "one of the worst cases yet", he said.
Matthew Hancock (pictured), the Conservative MP and former chief of staff to George Osborne, has just told BBC News that Ed Miliband is "jumping on the bandwagon" in calling for a criminal investigation into Barclays. He said Labour should apologise for not regulating the City properly.
Hancock can make the "bandwagon" charge because, for some time now, he has been saying that bankers should face criminal charges if they behave recklessly.
Earlier I said that politicians had not said much about the Barclays scandal. (See 9.00am.) That did not last long. We've now had Boris Johnson and Ed Miliband saying "call in the cops". They've beaten George Osborne by at least two hours, because he won't be giving his response until he addresses the Commons at around 12.15/12.30pm.
By my count, Johnson (pictured) beat Miliband in getting his "lock up the bankers" message out by just a few minutes. Shortly after 10am, BBC News broadcast an interview with him in which he said that the Barcays scandal involved behaviour that was "almost certainly criminal".
To manipulate an interest rate for gain looks to me like a very, very dodgy practice indeed. And I hope that the whole thing is fully investigated and those who are liable pay the price.
It's not for me to say who is culpable in this, but plainly banks have been forthcoming in getting their dirty linen out there and I think the whole banking industry now needs to come clean about what has been going on. And, in so far as there has been a conspiracy to manipulate Libor, which seems to be what's going on, in so far as that has been done for gain by these banks in order to guarantee the success of their own derivatives, trades or whatever, then it strikes me that that is almost certainly criminal and there needs to be a proper investigation.
Shortly afterwards, just as I started writing up the Johnson quotes, Joey Jones popped up on Sky to report that Miliband would be using his speech today to call for a criminal investigation into the Barclays affair.
Nick Clegg's plans for Lords reform did not receive universal approval when they were published yesterday. And today another of his proposed constitutional reforms - allowing MPs guilty of wrongdoing to be "recalled" - has been criticised. In a report, the Commons political and constitutional reform committee says the idea should be dropped.
We are not convinced that the proposals will increase public confidence in politics. Indeed, we fear that the restricted form of recall proposed could even reduce confidence by creating expectations that are not fulfilled. Under the government's proposals, constituents themselves would not be able to initiate a recall petition. The circumstances that the government proposes would trigger a recall petition?if an MP received a custodial sentence of 12 months or less, or if the House of Commons resolved that there should be a recall petition following a case of "serious wrongdoing"?are so narrow that recall petitions would seldom, if ever, take place. Moreover, time has shown that the existing democratic and legal processes worked in removing the MPs who were shown to have been guilty of serious wrongdoing during the expenses scandal ...We recommend that the government abandon its plans to introduce a power of recall and use the parliamentary time this would free up to better effect.
If the government were to follow this advice, MPs would, of course, have more time to debate Lords reform ...
George Osborne is going to make a statement on the Barclays scandal in the Commons this afternoon, the BBC is reporting.
Here is the ONS release with the latest information about the growth figures. And here is the ONS statistical bulletin with the full details (pdf).
And here's the top of the latest Press Association story about the growth figures.
The double-dip recession is deeper than originally feared as revised figures today showed a sharper decline in the economy in the final quarter of last year.
Gross domestic product (GDP) shrank by 0.4% between October and December, compared with a previous estimate of 0.3%, while the economy contracted by an unchanged 0.3% in the first quarter of this year, the Office for National Statistics (ONS) said.
The figures mean the current recession - defined as two or more quarters of declining GDP in a row - is more severe than first thought.
The impact of the weak economy was underlined by household spending figures, which showed expenditure falling by 0.1% compared with a previous estimate of 0.1% growth.
Here are the two the Press Association snaps about the growth figures.
Gross domestic product shrank by 0.3% between January and March, official figures confirmed today.
GDP in the final quarter of 2011 declined by a larger than previously estimated 0.4%, the Office for National Statistics said.
That means that, for the second time, the ONS is saying the double-dip recession is deeper than we thought.
For the record, here are the latest YouGov GB polling figures.
Labour: 45% (up 3 points from YouGov on Tuesday night)
Conservatives: 31% (down 3)
Lib Dems: 9% (down 2)
Ukip: 7% (no change)
Labour lead: 14 points
Government approval: -31 (up 5)
While we're on banking, Sir Martin Taylor, the former Barclays chief executive, told the Today programme this morning that someone "at senior level" at the bank must have known what was going on.
The question of how high up knowledge of this goes is something only Barclays can answer. I think they should answer. These organisations are very large, as I know myself, and the chief executive doesn't always know everything that's happening in the organisation, though he's responsible for setting the tone of the organisation.
But somebody at senior level somewhere will certainly have known. I can't believe Barclays haven't identified who that is. They've been investigating for years, so have the FSA, and no doubt they will take appropriate action.
It's really for the board to decide whether Bob Diamond, who has amazing leadership qualities and huge personal following in the organisation, can be the person to turn the page on this, or whether he's part of the problem.
It sounds as if Ed Miliband is going to come close to calling for Bob Diamond to resign as the Barclays chief in the light of the interest rate rigging scandal. Sky's Joey Jones has just posted this on Twitter.
Expect ed mili to give diamond nudge in speech later: need for indivs to "take responsibility"; broader argument that system not working
? joeyjones (@joeyjonessky) June 28, 2012
There has not been a great deal of political reaction yet to the revelation that Barclays has been fined �290m for manipulating interest rates, but that might change today, particularly in the light of reports that this is just the start of what will turn out to be a monstrous scandal. Ed Miliband is speaking at the Unite conference in Brighton this morning and he is expected to speak out. According to extracts from the speech released in advance, he is also going to urge unions to help Labour fight abuses of the minimum wage legislation.
Only seven companies have ever been prosecuted for not paying it. Is there anyone here who believes that only seven have broken the law? As we campaign for better wages for hard-working people, we need also to think about our labour market. About how it has become possible for some to be paid so poorly. Some recruitment agencies in this country specialise in employing migrant labour from Eastern Europe and effectively close their books to workers from Britain, so that they can bring in workers who are unorganised and unprotected. I want us to come together to fight exploitation and discrimination - of local workers as much as migrant workers - so we get decent labour standards in this country.
I'll report more from the speech when we get it.
Otherwise, it's a bit patchy. Here's the agenda for the day.
9.30am: The Office for National Statistics publishes its third estimate for growth in the first quarter of 2012.
9.30am: Rachel Reeves, the shadow chief secretary to the Treasury, gives a speech to the Resolution Foundation on living standards.
10.45am: Ed Balls, the shadow chancellor, speaks at the Local Government Association conference.
Mid-morning: Ed Mililband speaks at the Unite conference.
Around 1pm: The EU summit starts in Brussels. There is more coverage on our eurozone crisis live blog.
1.30pm: Peter Luff, a defence minister, speaks at a Royal United Services Institute conference.
3pm: Vince Cable, the business secretary, gives evidence to the business committee about executive pay.
3.30pm: Eric PIckles, the communities secretary, speaks at the Local Government Association conference.
As usual, I'll be covering all the breaking political news, as well as looking at the papers and bringing you the best politics from the web. I'll post a lunchtime summary at around 1pm and another in the afternoon.
If you want to follow me on Twitter, I'm on @AndrewSparrow.
And if you're a hardcore fan, you can follow @gdnpoliticslive. It's an automated feed that tweets the start of every new post that I put on the blog.
Source: http://www.guardian.co.uk/politics/blog/2012/jun/28/ed-miliband-unite-politics-live-blog
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