Bankers still in the dock over Libor

Despite the Chancellor’s efforts to widen the scandal over Libor to the last government, the focus remains firmly on Barclays. Today’s testimony to the Commons Treasury Committee by Barclays chairman Marcus Agius is likely to ratchet up the pressure on the bank, not least because of the news that Bob Diamond, who resigned as chief executive last week, will get a pay-off of up to £2 million. The unavoidable impression is of bankers presiding over malpractice and failure — yet still being handsomely rewarded. But the political fallout is toxic too.

George Osborne’s accusations last week, where he implied that Shadow Chancellor Ed Balls had exerted pressure on Barclays to lower its Libor rate in 2008, were yesterday rejected by Bank of England Deputy Governor Paul Tucker. Mr Tucker’s denials led Tory Treasury select committee member Andrea Leadsom MP to say that the Chancellor should apologise to Mr Balls. That is unlikely to happen — Foreign Secretary William Hague today dismissed the call — but Mr Osborne’s strategy appears to have backfired badly. The Bank of England merely appears to have been keeping a close watch on Barclays during the crisis — as indeed it should have, given that the bank was looking like a possible recipient of a state bailout.

Yet while the public’s jaundiced view of bankers is unlikely to be improved by Mr Agius’s performance, events in Europe underline the real seriousness of the banks’ situation. Eurozone finance ministers yesterday agreed to lend Spain €30 billion to rescue its banks, the first tranche of a bailout that could total €100 billion. No British bank is in such dire straits but the risk of contagion from Europe is very real: no one really knows the extent of British banks’ exposure to toxic assets through complex financial instruments. If they need rescuing again, then after the Barclays scandal the public’s mood will be even less forgiving than it was in 2008.

The closure of the M4 flyover at Boston Manor would be farcical were it not so serious coming so soon before the Olympics. The VIP Olympic lanes, including from Heathrow, are due to open on Monday and are a central component of the transport strategy for the Games. The road’s Hammersmith flyover was closed for months earlier this year when cracks were found in supports. Now Transport Minister Mike Penning has said that the new problems could be the result of a previous set of repairs: the cracks were not there before.

A six-mile section of the road is closed to traffic, causing gridlock in west London. If it is not fixed by Monday, the Games’ transport arrangements will run into trouble earlier than anyone predicted. The Highways Agency hopes the road will re-open on Thursday. For the sake of London’s reputation, it has to make sure it does.

The news that the Government is to invest £10 million in a literacy fund for schools is a vindication of this paper’s Get London Reading campaign. Schools will be able to use the funds for one-on-one reading mentors and the like. That is the approach of this paper’s reading volunteers, organised through our partner organisation Volunteer Reading Help. Yesterday test results showed a dramatic improvement at St Mary’s, the Battersea primary school where dozens of volunteers have been helping children read. Such simple intervention can make a real difference to children’s literacy — and thereby a much bigger transformation: reading transforms lives.