David Cameron and Labour leader Ed Miliband clashed in the Commons over the terms of an inquiry into the interest rate-rigging scandal surrounding Barclays.

The Prime Minister said a single parliamentary inquiry into the “appalling” events would be the most “swift and decisive” course of action. But Labour’s leader said this was “too narrow” and a much wider judicial probe into the culture of banking was needed.

At Prime Minister’s Questions, Cameron said the manipulation of the key Libor inter-bank borrowing rate by Barclays traders was “outrageous” and those responsible should be punished. “We have to get to the bottom of what happened and quickly,” he told MPs, “We must get to the truth.”

The Commons will vote on Thursday about whether to back the government’s call for an immediate inquiry by a committee of MPs and peers or Labour’s alternative proposal for a judge-led probe - similar to the current Leveson investigation in press standards.

The Prime Minister held talks with Miliband on Tuesday about the nature of any inquiry and No 10 still hoped it would be possible to gain cross-party support for the way forward. But, in heated exchanges in the Commons, Miliband said the prime minister did not understand the “depth of public concerns” about the matter and was failing to act in the national interest.

“Whenever these scandals happen, he has failed to act and he stands up for the wrong sort of people”, Miliband said. But Cameron said the wrongdoing had taken place while Labour was in office. “People would take a very dim view of an opposition that stands in the way of an inquiry because they do not want their dirty washing done in public”, he said.

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