Ex-RBS chief should renounce pension, says Darling

Former Royal Bank of Scotland chief Sir Fred Goodwin's £650,000 pension was neither negotiated nor approved by the Government, Chancellor Alistair Darling said today.

Mr Darling said ministers only became aware last week that a decision by the bank's former board to allow Sir Fred to take early retirement had increased his pension entitlement and might have been a "discretionary choice".



UK Financial Investments - the body which manages taxpayers' shareholdings in the part-nationalised banks - has been asked to look into clawing back some of the pension deal, the Chancellor told MPs, but Sir Fred could end the controversy by agreeing to give it up.



"The ball remains in his court," Mr Darling said.



The news followed calls from shadow chancellor George Osborne for the Government to reveal how much it knew about Sir Fred's pension deal.



He also called for Sir Fred to give up the pension, saying: "There is of course now only one person who can correct this huge error of judgment by the Chancellor, and that is Sir Fred Goodwin himself, who should in all decency renounce his pension."













Mr Osborne described the pension as a "totally irresponsible use of taxpayer's money" and said there appeared to be differing accounts on how much the Government knew about it.

While Mr Darling had said the Government only found out about the deal recently, present RBS chief executive Stephen Hester had told BBC Radio 4's Today programme: "The arrangements for my predecessor's departure were negotiated directly between past directors of this board and the Government and him."



Responding to a statement announcing the latest bailout for RBS, which will see £325 billion of the bank's assets placed in a taxpayer-backed protection scheme and a further £13 billion stake in the institution taken by the Government, Mr Osborne asked "who exactly" knew about the deal.



He also wanted to know whether Sir Fred, who presided over the near collapse of RBS, had delayed his departure to negotiate the pension.



"Whichever way one looks at it, this obscene pension is unacceptable and the Government is on the hook," Mr Osborne said.



"Either they did know and failed to act, or didn't know and failed to ask the right questions.



"It is a totally irresponsible use of taxpayer's money, and there is of course now only one person who can correct this huge error of judgment by the Chancellor, and that is Sir Fred Goodwin himself - who should in all decency renounce his pension."



Mr Darling agreed it was "beyond doubt" that most people would find it hard how the former boss of a bank that had posted the biggest losses in UK corporate history could be paid "such an enormous pension" from the age of 50.



But he said: "This agreement was not negotiated by the Government, nor was it approved by the Government - nor would it have been, because the agreement in relation to the remuneration, the pension arrangements between employees of a bank are a matter between that employee and the board of directors.



"What we did know last autumn was that we were told there was a contractual agreement between the board of the bank and Sir Fred.



"What we did not know, because we had previously understood that his pension arrangements were an unavoidable contractual commitment, what we didn't know, and it was only very recently that we became aware, that the decision of the previous board 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."



Pressed by seated MPs as to when ministers became aware, Mr Darling said: "Last week, actually, it became clear that this may have been a discretionary choice."



UKFI would continue to discuss with the board of RBS whether the pension could be clawed back, he said, and Sir Fred had been asked to give it up.













Liberal Democrat economic spokesman Vince Cable said he "totally agreed" with Mr Osborne's comments.

"This is public expenditure," Mr Cable said.



"This is a massive public spending increase, public wages, for which there is no justification whatever."



Left-wing Labour veteran Dennis Skinner (Bolsover) said the banking fraternity had been "on a winner" for some time and were no better that Nick Leeson, the rogue trader who caused the collapse of Barings Bank in the 1990s.



He said: "Instead of paying out these vast executive bonuses and Freddie Goodwin's massive £650,000 pension, why not tell them that those of us on these benches will gladly walk through that voting lobby to ensure that all those executive bonuses and all that pension fund for Freddie Goodwin and his mates will be paid for out of the toxic debt when it had been repaid - and that will be never.



"That's the proposal we ought to put to these bankers, and treat them with the contempt they deserve."



Mr Darling said he agreed that it "absolutely essential" to change the culture within banks towards one that ties bonuses to long-term performance.

Start your day with The Independent, sign up for daily news emails
Sport
footballHe started just four months ago
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Ashdown Group: Senior Marketing Executive- City of London, Old Street

£40000 - £43000 per annum + benefits: Ashdown Group: Senior Marketing Executiv...

Ashdown Group: Marketing Manager

£40000 - £43000 per annum + benefits: Ashdown Group: An international organisa...

Ashdown Group: Internal Recruiter -Rugby, Warwickshire

£25000 - £30000 per annum: Ashdown Group: Internal Recruiter -Rugby, Warwicksh...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect