Tory says Osborne should "apologise" to Balls

Osborne's probable reaction on listening to Ms Leadsom

Andrea Leadsom (Con South Northamptonshire) has said the Chancellor George Osborne had "made a mistake with his claim" and "would probably want to apologise" for the allegations he made in the Spectator last week regarding Ed Balls. The allegation was "My opposite number was the City minister for part of this period and Gordon Brown's right hand man for all of it. So he has questions to answer as well. That's Ed Balls, by the way," he added.

Allegations which sparked a furious clash between Mr Balls and Mr Osborne last Thursday in the House of Commons. The Shadow Chancellor saying the Chancellor had "impugned my integrity" Mr Osborne stood firm and urged his Labour shadow to "explain what Labour's involvement was, who were the ministers, who had the conversation, who were the senior figures".

On Monday, Bank of England deputy governor Paul Tucker was asked by the Treasury Select Committee whether any government official or minister in 2008 had asked him "to lean on" Barclays or any other bank to lower their Libor submissions. Specifically, he was asked about Baroness Vadera, an adviser to then-Prime Minister Gordon Brown, Shadow Chancellor Ed Balls, who was then the City Minister, and the then Downing Street chief of staff Sir Jeremy Heywood. Rejecting claims that any of them had asked him to pressure Barclays to lower its Libor submissions, his response each time was "absolutely not".

Shadow Chancellor Ed Balls has released a statement saying: “It is now absolutely clear that the Chancellor's allegations last week were totally false and completely without foundation. George Osborne should now publicly withdraw these false allegations and apologise. With the economy in a double-dip recession and our banks in need of serious reform, the country needs a Chancellor who works full-time in the national economic interest.”

This morning Foreign Secretary William Hague told the BBC's Today programme on Radio4 "There remains questions to answer and I see no reason why he (Osborne) should apologise." He continued say there were "questions to answer for ministers in the previous government" which would be investigated by a Parliamentary inquiry. And that would include the role played by Mr Balls, who was Labour's City minister between 2006 and 2007, he added.