PM has reached new low - Miliband
Labour leader Ed Miliband has hit out at David Cameron for using the Paul Flowers scandal to attack his party's links to the co-operative movement.
He claimed the Tory leader reached a "new low" at Prime Minister's Questions by using the Co-op Bank's near collapse and its former chairman's high-profile troubles to score political points.
In a strongly-worded attack on the Tory leadership's style, Mr Miliband accused the Prime Minister of resorting to a strategy of mud-slinging in an effort to win the 2015 election.
Writing in the Independent on Sunday, Mr Miliband said Mr Cameron "hit a new low by trying to use the gross errors and misconduct of one man, Paul Flowers, to impugn the integrity of the entire Labour movement".
He said: "We all want proper answers as to what went on at the Co-operative Bank, and the public deserves better than the desperate attempts by the Tory party to score the cheapest political points, including ludicrous claims that Labour's historic links with the Co-op movement were the invention of Rev Flowers.
"Of course, the credibility of their smears was undermined when it emerged that the Chancellor himself was promoting the Co-op's bid to take over Lloyds Bank branches."
The Tories have sought to highlight the close links between Labour and the Co-op, including "soft loans" at preferential rates and a £50,000 donation to Ed Balls' office from the Co-operative Group.
But Labour have used the row over the near collapse of the lender to put pressure on George Osborne over the Co-op's aborted bid for Lloyds branches.
Mr Flowers was released on bail by police after questioning over drugs allegations and Chancellor George Osborne has ordered an independent investigation into the Co-operative Bank's activities since 2008.
The 63-year-old Methodist minister was questioned at a Leeds police station by officers "investigating allegations of drug supply offences".
Mr Flowers stepped down as Co-op Bank chairman in June and questions have since been asked about his competence in the role amid claims of illegal drug use, inappropriate expenses, drink-driving and pornographic material found on a council computer.
He was suspended by both the Methodist church and the Labour Party following the allegations that he bought and used illegal drugs.
Mr Miliband claimed the heated exchanges at Prime Minister's Questions over Labour and the Co-op, along with attacks over the trade unions and seeking to blame Andy Burnham for NHS failings, were part of a plan to fight the "dirtiest general election campaign" for 20 years, masterminded by Tory strategist Lynton Crosby.
"David Cameron cannot resist a low blow when the British public craves a politics on the high ground.
"His main political strategy is now to sling as much mud as possible in the hope that some of it sticks. When he does so, he demeans his office."
Tory chairman Grant Shapps hit back at the Labour leader, highlighting the activities of Gordon Brown's former spin doctor Damian McBride.
"This is a pathetic attempt to evade the serious issues. Labour have big questions to answer, and when they are asked, they simply try to avoid them by claiming they are smears," he said.
"It is an obvious tactic from the party that brought you the most disgraceful smear operation of modern times, fronted by Damian McBride, and known about, encouraged and tolerated by Ed Balls and Ed Miliband.
"And McBride was simply the latest in a long line of bullying Labour spin doctors, including Alastair Campbell and Charlie Whelan. Incredibly, Labour's new campaign chief Michael Dugher used to be McBride's right-hand man - it's the same old Labour.
"We suggest they explain how the corruption at Falkirk happened, and how the Rev Flowers was allowed to become and remain an adviser, rather than dismiss legitimate questions as smears."
Mr Cameron used the latest Prime Minister's Questions session to announce an inquiry into the Co-op, prompting Labour to demand assurances from Cabinet Secretary Sir Jeremy Heywood, the country's top civil servant, that the investigation would not be a "Trojan horse" for a political attack.
The Treasury Select Committee's Tory chairman, Andrew Tyrie, questioned the manner in which the inquiry was announced, telling BBC Radio 4's Week in Westminster: "I think announcing a review in the politically charged atmosphere of Prime Minister's Questions is not the best place to secure all-party support."
Meanwhile, Greater Manchester Police have made an arrest in an alleged plot to kidnap a male escort who made newspaper claims about Mr Flowers.
Following his revelations to the Sun newspaper earlier this week, the 31-year-old man reported to police that he received threatening text messages to his mobile phone.
A 29-year-old man was later arrested on suspicion of conspiracy to kidnap. He has since been bailed pending further inquiries.
Labour insisted that its finances were on a "secure footing" despite reports that it may have to pay off loans from the Co-op before the 2015 general election.
The Sunday Telegraph reported that Labour could face the prospect of paying off more than £2 million in loans from the Co-op and a sister bank when the lender is taken over in a rescue deal being put together by US hedge funds.
The newspaper said the loans were secured with the party's future revenue from trade union affiliation fees as collateral and Mr Miliband's decision to review Labour's links with the unions potentially means the finance arrangements could be subject to renegotiation.
But a Labour spokesman said: "Our loans with the Co-operative Bank and Unity Trust Bank are secured and are being repaid in accordance with formal long-term commercial agreements and the Labour Party is on a secure footing for the future."
The Opposition will launch a fresh push for an annual "validation of competence" check for senior bankers this week when the Financial Services (Banking Reform) Bill returns to the Lords.
Ministers rejected two attempts to insert the measure into the legislation in the Commons and an earlier attempt to amend the 2012 Financial Services Act as it progressed through the Commons.
Shadow financial secretary Cathy Jamieson said: " Paul Flowers was chairman of the Co-op Bank for three years while David Cameron and George Osborne have been in Government.
"During that time they were not only encouraging the Co-op's failed bid to buy Lloyds branches but also opposing a tougher regime for senior bankers. An annual health check, which ministers resisted on three separate occasions, could have spotted problems and rung alarm bells in this case.
"We will push our amendment again in Parliament this week. After the revelations of the last few days David Cameron and George Osborne should do a U-turn and back it.
"There are now mounting questions for the Government to answer about how the Co-op Bank got into trouble on its watch. George Osborne and his ministers cannot continue to duck them."