Anna Jones: What is your reaction to Bob Diamond going? Are you pleased?
Ed Balls: I think it was inevitable, I think that we need leadership and change and, as Ed Miliband said at the weekend, it was hard to see how Bob Diamond could do that. I’m afraid we are going to see more banks in difficulty in the coming weeks because of this Libor scandal and it is bigger in the end than any one bank or any one individual. We need big systemic change to rebuild a culture where, to be honest, at the moment the public are saying ‘can we trust banks with our money to make the right decisions without rigging the market for their own profit?’.
AJ: All the more reason to crack on with a Parliamentary inquiry then?
EB: Well I think all the more reason to crack on with a proper, arms-length judicial public inquiry like we have seen with the Leveson report. We called on Friday for a big open inquiry. I think to be honest a Parliamentary inquiry is substantially third best and the way the government has handled this since yesterday in a totally partisan way is, to be honest, undermining trust. We need as politicians to say look we all got this wrong, there needs to be big change and we can only do that in the open scrutiny of proper hearings with proper disclosure from the politicians and the bankers, everybody there, so the public can see it is being done properly. Not just a Parliamentary inquiry, we have had those before.
AJ: But that could take a very long time to set up and go through, isn’t it better that we get on with it now, speed is of the essence isn’t it?
EB: Well I don’t think speed is of the essence …
AJ: Doesn’t change need to happen now?
EB: Well if that comes at the expense of doing things in an open and proper way, the government is already watering down the Vickers Commission recommendations on banking reform. That is a problem. But it can’t be done simply by a government majority, only Parliamentarians in Parliament. In other areas, like the media or on Iraq, we had Parliamentary inquiries. It is only when you have the forensic judicial and QC process you can really open this up. I hope the government listens.
AJ: Don’t you trust your democratically elected colleagues to do a decent job though?
EB: I think our democratically elected colleagues are not QCs. Parliament doesn’t have the disclosure rules of a court and, in the case of Leveson, it has actually opened up things which couldn’t be opened up and wasn’t opened up in previous Parliamentary inquiries. It is not good enough and it was bounced through yesterday without any consultation with anybody. The government is clearly now worried, they’ve got no consensus, quite rightly, because this is not the way to do things.
AJ: Do you definitively rule out taking part in any kind of Parliamentary inquiry?
EB: Well I have not given up yet on persuading David Cameron and George Osborne to rise above partisan politics …
AJ: So is that a yes or a no?
EB: I think we will wait to see whether they change their mind. We are hoping there will be votes in Parliament that will allow us to make the case for a judicial inquiry. My fear is us cooperating in a Parliamentary inquiry would be third best, it wouldn’t satisfy the public. So I would much prefer that we don’t go down that road.
AJ: You will consider it as a possibility?
EB: Well look, I’m not going to give up on persuading the government to do the right thing – an open judicial public inquiry. I would be happy, it would be tough but we should appear before these things, but that is true for all of us politicians, previous chancellors and shadow chancellors, it is the only way for the public to see it is done properly.
AJ: You admitted Labour made mistakes; I mean it could be a very uncomfortable time for you whatever form this inquiry takes, there will be a lot of tough questions of you yourself and what Labour did in terms of clamping down on regulation of the banks?
EB: I hope so and that is right and proper and it is what the public want …
AJ: What do you want to say now what mistakes you made?
EB: I said it before and I’ll say it again, we didn’t regulate the banks in a tough enough way. I have also said, at that time, the shadow Chancellor George Osborne and Mark Hoban the Financial Secretary were urging us to be less tough, they said we were too heavy-handed. This needs to be out in the open, we need to have a debate about these things and I would be very happy to have that scrutiny.
AJ: OK, why weren’t you tougher? Was it because you wanted the banks to make loads of money because it was good for the economy? What was the main reason?
EB: Well look I want our banks to create jobs and invest in the future, but I also want them to do things in a trusted way. It wasn’t our party which had millions of pounds in donations from the City, that was the Conservative Party, that wasn’t our motive. But all the time when I was a City minister and I was urging tough regulation – not tough enough – I was continually attacked by the City, by the banks, and by the Conservative Party for being too tough. Now I relish the opportunity to have this debate in public, in scrutiny, in a courtroom. We should have this all out and we should ask the Conservative Party why did they vote against the Financial Services Bill in the beginning of the last decade which brought in statutory regulation rather than old boys’ City club regulation? Big questions for George Osborne and David Cameron: why are they afraid of an open, public, forensic judicial inquiry? I don’t know, but I think we should all be there.