Pressure grows on Cameron to give Osborne the push

Andrea Leadsom comment to BBC leaves Osborne little option but to apologise to Ed Balls

Column LAST UPDATED AT 07:50 ON Tue 10 Jul 2012

CHANCELLOR George Osborne is facing a humiliating climbdown today over wild claims in The Spectator - repeated in the Commons - that Ed Balls was involved in the scandal over Barclays' fiddling of the Libor inter-bank lending rate.

Osborne is under pressure from his own side to apologise to Balls after Bank of England deputy governor Paul Tucker flatly denied before the Treasury select committee yesterday that former ministers in Gordon Brown's government put pressure on him to get Libor down in 2008.

Osborne is in Brussels today, defending bankers' bonuses from EU attempts to cap them. He would rather cut off his right arm or do the Japanese TV torture of crawling through a nest of ants while covered in honey than apologise to Balls, who has become almost a hate figure on the government front bench.
 
Osborne has always been a liability for David Cameron and this episode will increase pressure on the PM to reshuffle him out of the Treasury some time soon to concentrate on his other job as the strategist for the next general election.

Dave may hesitate to do so in his end-of-July reshuffle because Osborne has his hands full with the banking crisis. But the PM will have to be bold one of these days if he is to avoid comparisons with Blair/Brown and he has an able replacement at hand in William Hague.

Osborne won't thank Andrea Leadsom, a Conservative member of the Treasury select committee, for piling the pressure on him last night. "I think obviously he made a mistake and I think he should apologise to him," she told BBC Radio 4's The World Tonight.

Leadsom, a former Barclays banker, was the only member of the select committee to emerge with credit from last week's questioning of Bob Diamond, the ex-CEO of Barclays, over a memo suggesting Whitehall involvement in the scandal when Gordon Brown was in Number Ten. She was tipped for a government job but may have to kiss goodbye to that now.

She has left Osborne with little option now but to apologise or risk allowing his personal spat with Balls to escalate into a feud which will be a distraction every time they both appear in public. Scenes in the Commons last Thursday were compared to a schoolyard ruck.

Allies of the Chancellor - he still has a few - will point to the fact that the man who turned the screw on Osborne yesterday was Pat McFadden, a Labour member of the Treasury select committee, and former political secretary to Tony Blair. He put a series of detailed questions to Tucker in order to clear the names of Brown and his ministers from the Osborne smear.

He asked Tucker whether he had been asked by Brown's officials or ministers – and specifically Brown, Balls and Baroness Shriti Vadera – to lean on Barclays to cut its Libor rate. "Absolutely not," Tucker replied to each name.

David Cameron will want Osborne's apology out of the way before PMQs tomorrow. Watch this space. · 

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All this is based on the assumption that Paul Tucker is telling the truth. To paraphrase Mandy Rice Davies 'Well he would deny it, wouldnt he?'