James Forsyth

There’s long been a certain amount of speculation in Westminster about how long the coalition will last. This topic used to be the sole preserve of those who were sceptics of it; it was a question hoping for the answer not that long. Enthusiasts for coalition, took it as a given that it would last to 2015. But today Matthew Parris, one of the commentators who has been most welcoming of the coalition, writes, ‘I’m close to despair and no longer confident that the coalition can continue even into next year.’   When even the coalition’s friends are saying this, then it is time for the Prime Minister and deputy Prime Minister to take notice.

There are, though partisans don’t want to admit it, problems with both a judicial inquiry and a parliamentary inquiry into the Libor scandal and the wider culture it has revealed. A judicial inquiry would drag on and, judging by the Leveson Inquiry, there’s no guarantee that the judge would understand the industry he’s meant to be examining. But, as yesterday demonstrated, the standard of questioning at any parliamentary inquiry is going to be patchy.   John Thurso, a Lib Dem member of the Treasury select committee and one of the most respected MPs, has been out floating a compromise solution. His idea is that the Joint Committee should have the power to take on QCs.

David Cameron’s position on Europe is becoming clearer. ‘Fresh settlement, fresh consent’, the soundbite he kept using, is simply a euphemism for renegotiation followed by a referendum. It seems that this renegotiation will span the next election. Indeed, it will start as soon as a new EU treaty is proposed. In response to a question from Peter Lilley, Cameron said he will try to use any forthcoming treaty to attempt to bring powers back to this country. Those close to Cameron say that the plan is to get as much back before the next election and then accelerate the process as soon as there is a treaty negotiation under a Conservative-only government. When the referendum does come, it will most likely offer a choice between the new terms and out.

The momentum for a public inquiry into banking is growing. The Daily Mail front page demands ‘Put Bankers In the Dock’. While Ed Miliband has given an interview (£) to The Times in which he calls for an inquiry into the ‘institutional corruption in the City’. Miliband thinks that this inquiry should be tasked with drawing up a code of conduct for investment bankers equivalent to the one governing solicitors. Bankers who breached this code would be struck off.   Now, many will say that Labour have a cheek lecturing on banking regulation given the total failure of the new system they introduced.

The Libor scandal is both a threat and an opportunity for Labour. The threat is that the abuses took place under a regulatory system that was devised by the last Labour government and by a Chancellor who both Eds worked for. As I said yesterday, the Tories are determined to hammer Balls — a former City minister — on this. But the opportunity is that it offers Ed Miliband a chance to act as if he is the tribune of the people, the leader brave enough to take on the powerful. So as with News International and phone hacking, we’ve seen Miliband getting out in front in terms of calling for the top people at Barclays to go and Labour is also backing an independent inquiry into the banks, something the government is currently opposed to.

The Libor scandal is yet another blow to the reputation of the City of London. Alistair Darling may have been right when he told George Osborne that we’re ‘kidding ourselves if we think this was the only country where this happened.’ But there’s no getting away from the fact that an uncomfortably large number of financial scandals start in London.     In the Commons, Osborne seemed keen to move towards a more American-style system of regulation with more prosecuting powers for the FSA and new criminal offences. But he was also keen to make a political point, this happened under the last government and a regulatory system set up by Gordon Brown and Ed Ball.

Ed Miliband had a bit of swagger about him at PMQs today. In a sign of how the two leaders fortunes have reversed, it is now Miliband who appears to be relishing their exchanges.  From the off, Cameron was in a peevish mood. Miliband secured a fairly comfortable points victory. His ‘Cabinet of comedians’ line was a definite hit and Nadine Dorries keeps presenting him with new material. But Cameron will be relieved that Miliband is landing any knock-out blow on him; there was nothing said today that will stick long in the memory. Interestingly, the Tory whips had planted a question which allowed Cameron to open the session by saying how keen he was to get Lords reform through. The intended message to the Lib Dems was: look, we really are trying on this.

Talk to anyone in Downing Street and they can give you the four main reasons that voters cite for switching from the Tories to Labour: the Tory leadership is out of touch, the cost of living, immigration and welfare. The first two of these reasons are why the government has been prepared to risk further ridicule by changing the Budget again to postpone the 3p fuel increase planned for August until the end of the year. The timing of today’s move, just hours after Ed Balls said Labour would call a Commons vote on the matter, will attract much Westminster comment. But the Tories are confident that this will pass most of the electorate by.