GOVERNMENT OUT OF TOUCH ON BANKING SCANDAL

FURTHER evidence that this Government is out of touch with reality came with its refusal to allow a judge to lead the inquiry into the bankers’ rate-fixing scandal. And it begs one question: why?

For what possible good reason is David Cameron so insistent that it would be best for someone other than an independent judge to look into this whole sorry affair?

Why does the Government feel it was appropriate for a judge-led inquiry into the phone hacking ignominy yet it doesn’t matter for this issue?

The sad truth is that there is no good reason. There is no justification. The Prime Minister’s decision is based not on common sense or decency but on one thing only: satisfying the Conservative Party coffers.

In fact, the Tories have raised at least £17m from the financial services sector since David Cameron become leader. A study in 2010 found that the City and property sector accounted for more than a quarter of the Conservative Party’s funding.

So, just like when the Tories insanely handed a tax break to Britain’s millionaires in the budget, the decision to plump for a Parliamentary Inquiry is founded not on the public interest.

It is founded on a need to appease the people who fund the Tory billboards. It was those Tory billboards that helped Mr Cameron and his crew bounce into Government in 2010 on the back of years of propaganda and empty promises.

But perhaps the real sadness in this whole situation lies much deeper than the shameless manner in which the Prime Minister and chancellor George Osborne have behaved over this debacle.

It is that out of this sham could have risen an opportunity to build bridges and establish new rules of engagement to help repair the damaged relationship between Britain and its bankers.

Let us make no mistake: the manipulation of interest rates for the benefit of bankers and to the detriment of the families, and small business it affected, is nothing short of an outrage.

But a properly stewarded investigation – independent of politics and free from any suspicion of inappropriate influence – could have provided the foundations for a fresh start.

Quite simply, people in Britain have lost faith in the banks. And this was an opportunity to restore it by separating the wheat from the chaff, pulling out the good and dispensing with the bad.

A judge-led inquiry has the legislative power to compel witness attendance and ensure documents are produced and properly examined.

Only an inquiry like this can be sufficiently challenging, wide-ranging, and independent to persuade the public that this crisis is being properly addressed.

The great sadness is that David Cameron knows all this and has made the very same points before.

When rejecting the idea of a Parliamentary Inquiry into the phone hacking scandal last year, Mr Cameron said: “I don’t believe there is any better process than an inquiry led by a judge”.

Perhaps Mr Cameron didn’t realise quite how much detail that inquiry would delve into. I certainly doubt he anticipated the recent public humiliation of having to admit to some of his embarrassing text exchanges with Rebecca Brooks prior to the last General Election.

But the reality is that the Leveson Inquiry has uncovered revelations and asked questions to which the public has the right to expect an answer. All of that would be true of a judge-led inquiry into the rate-fixing disgrace, and that is why Labour intends to continue pressing for one.