Harriet Harman admitted yesterday she was wrong to claim the former RBS chief Sir Fred Goodwin had been knighted for his charity work rather than his "services to banking".
Standing in for Gordon Brown at Prime Minister's Questions, Ms Harman tried to fend off questions over why Sir Fred had received his title by telling MPs it had been awarded in recognition of his work with the Prince's Trust charity.
"I think Sir Fred was nominated for a knighthood because of his services for the Prince's Trust," she said. "I understand it was not in recognition of his services to banking."
But Ms Harman's office soon had to admit that she had made an embarrassing error. When Sir Fred was knighted in 2004, Downing Street said that it had come for his work at the Royal Bank of Scotland, "where he undertook many challenging projects that benefited both his company and the Scottish economy as a whole".
The London Gazette, which publishes each honours list, said that the knighthood had come in recognition of Sir Fred's "services to banking".
A spokeswoman for Ms Harman corrected the blunder. "The Leader of the House is happy to correct what she said at Prime Minister's Questions today regarding Sir Fred Goodwin's knighthood," she said, soon after the end of PMQs.
"It was, in fact, the case that he received his honour for services to banking but no doubt his contribution to the Prince's Trust would also have been taken into account."
The Conservatives said the gaffe was a sign that the Government was embarrassed to have overseen the honouring of a man who some blame for the near-collapse of RBS.
Alan Duncan, the shadow Leader of the House, accused Ms Harman of "ignoring the facts" in an attempt to cover up the Government's once-close relationship with Sir Fred, whose knighthood is thought to have had the personal support of the Prime Minister.
"Instead of worrying so much about her campaign to succeed Gordon Brown, she should focus on mastering the detail," he said.
Ms Harman also faced jeers from the Conservative benches during PMQs over speculation that she had been positioning herself for a future leadership battle by taking a tougher line than her cabinet colleagues over City bonuses.
The shadow Foreign Secretary, William Hague, standing in for David Cameron, accused the Government of failing to put its numerous economic rescue schemes into action and told Ms Harman that now "could be her moment" to seize the initiative while the Prime Minister was in Washington.
"When Neville Chamberlain lost the House's confidence, Winston Churchill stepped in. Supermac [Harold Macmillan] stepped in when Anthony Eden failed. This could be her moment," Mr Hague said. Ms Harman said Mr Hague's attacks were "political gossip". She refused to repeat her bold claim made at the weekend that the Government could introduce laws to try to claw back the £700,000-a-year pension RBS had handed to Sir Fred.
Vince Cable, the Liberal Democrat Treasury spokesman, ridiculed her "eccentric proposal for a 'Harriet's Law'", saying the Government should use existing laws to strip Sir Fred of his pension, on negligence grounds.
But Ms Harman ensured she was not the only one embarrassed during the exchanges by reminding MPs that Mr Hague had benefited from big payments made by RBS.
She revealed that Mr Hague, who has a lucrative career as an after-dinner speaker, received up to £30,000 from the bailed-out bank for two speeches that he delivered in 2007.
Despite the murmurs over her political ambitions, Ms Harman has refused to keep a low profile. Soon after PMQs, she headed to 11 Downing Street for a high-profile launch of a pamphlet aimed at helping women suffering in the recession.Reuse content