A faltering performance by the hapless Alistair Darling yesterday, when he told the House about the Government’s plans to pump a further £25 billion into Royal Bank of Scotland and insure up to £325 billion of its toxic assets. MPs were unimpressed, and made their displeasure plain.
The greatest anger was reserved for the £693,000 per annum pension which Sir Fred Goodwin, the bank’s chief executive, is currently enjoying at the tender age of 50. Although, in the scheme of things, Sir Fred’s £17 million pension pot may seem small beer when incomprehensibly enormous figures are routinely tripping off ministers’ tongues, Members clearly viewed the issue as emblematic of the whole gross, egregious foul-up.
Darling was challenged by George Osborne as to whether, as Stephen Hester, RBS’s new chief executive, had asserted on yesterday’s Today programme, Goodwin’s pension had been agreed with the Government:
Finally, on excessive bonuses and rewards for failure, once again the Chancellor has promised there will be none. Yet this morning he said in his radio interview that he learned only a very short time ago that Sir Fred Goodwin was paid off with a £650,000 a year pension funded by the taxpayer. However, the new chief executive, who was on the same radio programme, said that the deal was negotiated with the Government. Who exactly in the Government knew about that deal? Will the Chancellor answer the claims that Fred Goodwin’s departure was delayed so that he could secure that pension? Whichever way one looks at it, that obscene pension is unacceptable and the Government are on the hook. Either they did know and failed to act or they did not know and failed to ask the right questions.
Darling’s response was stumbling:
The hon. Gentleman mentioned the remuneration of Fred Goodwin. It is beyond doubt that most people find it hard to understand, given what has happened to RBS, that such an enormous pension can be paid from the age of 50. Let me explain the position. First, the agreement was not negotiated by the Government; nor was it approved by the Government. Nor would it have been-[Interruption.]
Mr. Speaker: Order. Let the Chancellor of the Exchequer answer.
Mr. Darling: The agreement on remuneration-the pension arrangements-of employees of a bank is a matter between the employee and the board of directors. Last autumn, we were told that there was a contractual agreement between the bank’s board and Sir Fred. We previously understood that his pension arrangements were an unavoidable commitment, but we did not know-we became aware of it only very recently-that the decision of the previous board of RBS to allow Sir Fred to take early retirement had the effect of increasing his pension entitlement, and that that might have been a discretionary choice. We did not know that and, on finding out-[HON. MEMBERS: "When?"] Last week, actually. It became clear that the matter may have been a discretionary choice. When we found out, I asked United Kingdom Financial Investments, which holds the shares, to discuss with the new board of the bank whether there was any scope for clawing back some or all the pension entitlement, and whether the board made the decision in full knowledge of the facts. That investigation is going on at the moment.
Darling’s palpable discomfiture almost made me feel sorry for him. He is clearly deeply unhappy in his job, and unsurprisingly.
This morning, the issue of Goodwin’s pension is exercising the media mightily. Gordon Brown is apparently threatening to sue, although the basis of his action is unclear. On Newsnight last night, John McDonnell was calling for primary legislation to sort the issue out.
Fred’s wedge has all the hallmarks of a story that will run and run, causing still more damage to this unhappy, discredited Government.
Am I alone in finding the government’s treatment of Fred Goodwin a little unedifying? It seems to be bullying him: http://blog.matthewcain.co.uk/government-bullying-fred-the-shred/
I suspect that the pension was part of the price for Sir Fred going quietly, therefore I find it very hard to believe that the government did not know. It now appears like sour grapes. Yes, taxpayers are right to feel angry, but it should be at the people who invested our money and failed to deal with this thorny issue, rather than Sir Fred. I don’t think I know anyone who would easily or readily give up a pension like this, at least of we were honest.
Whenever we look at how this whole investment or bailout was handled, the government’s actions appear wanting, resignations are called for, but from government circles. There is another thing we need to consider, hige amounts of our monet have been invested into these banking giants and if we spend all our time looking behind us, at things we can do little or nothing about, then we will start to miss what is ahead of us, that would be a true disaster.
I have lost money as a result of the HBOS mismanagement.
Shortly before the crash, they offered me more shares in a rights issue as HBOS needed more liquidity.
Like a chump I believed that they would not deceive and I stumped up the money.
But they were in the process of deception. They knew that they had toxic assets.
Let the buyer beware, I appreciate that my loss is my own fault for being too trusting in a climate where everything had the appearance of going well.
To hear however that this man is benefitting from our loss is a huge insult.
I do not trust the Government after their handling of matters, they appear to be pitching from one crisis to another. Crisis management is not one of their strong points. They make more of a crisis with every lurch.