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Ed Miliband accuses David Cameron of 'smears' over Co-op Ed Miliband accuses PM of 'smears' over Co-op's Flowers
(about 1 hour later)
Labour has accused David Cameron of launching a "smear campaign" over its dealings with the Co-op Bank and its disgraced ex-chairman Paul Flowers. Ed Miliband has accused David Cameron of "unjustified smears" over claims about Labour's links to disgraced ex-Co-op Bank chairman Paul Flowers.
Ed Miliband will say Mr Cameron has "impugned the integrity of the Labour Party" with his claims. The Labour leader said the PM was scoring "cheap political points" and ignoring serious regulatory issues.
The prime minister has suggested Labour was aware of concerns about Mr Flowers but did "nothing" about them. The prime minister has suggested Labour was aware of concerns about Mr Flowers but did nothing about them.
He has ordered an inquiry into how Mr Flowers was deemed a suitable chairman of the bank.He has ordered an inquiry into how Mr Flowers was deemed a suitable chairman of the bank.
Mr Miliband said he suspended Mr Flowers from the Labour Party as soon learned of allegations about the Methodist minister.
He said the former Labour councillor had "deeply let down" people but the inquiry should focus on the regulatory failings that allowed him to become chairman of the Co-op Bank.
He said Labour had a "long-standing" commercial relationship with the bank, which predated Mr Flowers's role, and he was satisfied there were no questions to answer on it.
"The Conservative Party is just trying to throw around wild allegations," said Mr Miliband.
"What the inquiry needs to be looking at is the regulatory failings."
Mr Flowers apologised after a video on the Mail on Sunday website showed him handing over £300 in a car, apparently to buy cocaine.Mr Flowers apologised after a video on the Mail on Sunday website showed him handing over £300 in a car, apparently to buy cocaine.
It has since emerged that:It has since emerged that:
David Cameron has claimed the Co-op bank was "driven to the wall" by Mr Flowers, while he approved millions of pounds worth of "soft loans" to the Labour Party.David Cameron has claimed the Co-op bank was "driven to the wall" by Mr Flowers, while he approved millions of pounds worth of "soft loans" to the Labour Party.
He said the former Methodist minister, who was a business adviser to Mr Miliband, had "trooped in and out of Downing Street under Labour". He said Mr Flowers, who was a business adviser to Mr Miliband, had "trooped in and out of Downing Street under Labour".
Labour has hit back by attempting to implicate Chancellor George Osborne in the controversy.Labour has hit back by attempting to implicate Chancellor George Osborne in the controversy.
The party says Mr Osborne failed to carry out due diligence on the Co-op Bank over its plan to buy more than 600 branches from Lloyds Bank and that he pressed the EU to ease regulation on mutuals, including the Co-op.The party says Mr Osborne failed to carry out due diligence on the Co-op Bank over its plan to buy more than 600 branches from Lloyds Bank and that he pressed the EU to ease regulation on mutuals, including the Co-op.
The Treasury has dismissed the Labour claims as "a total distraction".The Treasury has dismissed the Labour claims as "a total distraction".
But Mr Miliband will also attempt to seize the initiative by accusing Mr Cameron of undermining integrity and honesty in politics with his attempts to link Labour to the scandal. Shadow chancellor Ed Balls said he had never had a personal meeting with Mr Flowers or had any direct phone or email contact with him, though he had met him at a group dinner.
BBC business editor Robert Peston said it was unlikely that Mr Osborne would have ordered regulator The Financial Services Authority to make the £750m Lloyds deal happen despite concerns the Co-op had too little capital. BBC business editor Robert Peston said it was unlikely that Mr Osborne would have ordered the regulator, the Financial Services Authority, to make the £750m Lloyds deal happen despite concerns the Co-op had too little capital.
He says in his blog: "This can't be the case, because if it was, George Osborne would be signing his own execution by ordering an investigation into all this.He says in his blog: "This can't be the case, because if it was, George Osborne would be signing his own execution by ordering an investigation into all this.
"Perhaps more likely is that the FSA simply didn't have the backbone to go against the prevailing political mood, that co-ops and mutuals were a good thing, and needed to be promoted.""Perhaps more likely is that the FSA simply didn't have the backbone to go against the prevailing political mood, that co-ops and mutuals were a good thing, and needed to be promoted."
When Mr Flowers appeared before the Treasury Select Committee of MPs on 6 November, he appeared to have "no grasp" of "basic" facts about the bank, Peston said.When Mr Flowers appeared before the Treasury Select Committee of MPs on 6 November, he appeared to have "no grasp" of "basic" facts about the bank, Peston said.
Mr Flowers had never worked in the banking sector in "any senior capacity", he said, but had been appointed chairman of the Co-op Bank as a result of a "power struggle within the co-operative movement".Mr Flowers had never worked in the banking sector in "any senior capacity", he said, but had been appointed chairman of the Co-op Bank as a result of a "power struggle within the co-operative movement".
The independent inquiry cannot begin until police have concluded their investigation into allegations that Mr Flowers bought and used illegal drugs.The independent inquiry cannot begin until police have concluded their investigation into allegations that Mr Flowers bought and used illegal drugs.