Alistair Darling says stripping Fred Goodwin of knighthood had 'a bit of the lynch mob' about it

A decision by the Government to strip Fred Goodwin of his knighthood because of his role in running the Royal Bank of Scotland had “a bit of the lynch mob” about it, Alistair Darling suggested yesterday.

Giving evidence to MPs the former chancellor said he believed that it had been a “terrible mistake” for the supposedly independent Forfeiture Committee to withdraw Mr Goodwin’s knighthood for services for banking and said he found the whole episode “repugnant”.

“It backfired, it shouldn't have been done,” he told members of the Public Administration Committee who are investigating the honours system.

“It was not the fault of one man, he made mistakes, but to try and pass this off as ‘here's the one man’, it brings politics into disrepute.

“We're all supposed to be equal before the law, something is very wrong when you say ‘I'm picking you out’ after the event. I found the whole thing so repugnant."

Mr Darling, who was chancellor at the time of financial crisis and had extensive dealing with Mr Goodwin over the bail out of RBS, said he had not considered stripping Goodwin of his knighthood “for more than a couple of minutes” as he knew he would be accused of trying to “pass the buck”.

He was eventually stripped of his honour at the end of January for bringing the honours system into disrepute.

Mr Darling also questioned whether it was appropriate to include the word ‘empire’ in honours such as the OBE and CBE.

“We don't have one,” he said. “So…Commander of the British Empire (CBE) is something we are in no positon to offer.”

Mr Darling’s comments were echoed by the former Labour trade minister Lord Digby Jones who told the committee he was embarrassed when he had to explain to people abroad that the word ‘empire’ was included in honours.

“We are going to have to shelve and dismiss the arrogance that comes of 200 years of empire, we are going to show the world we are damn good at what we do,” he said.

“The moment you say the word 'empire' you just wish you didn't have to. At one end you get the Opium Wars, at the other the some battle for independence.”