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Harriet Harman's Cabinet colleagues conspicuously refused today to back her assertion that Sir Fred Goodwin will not be allowed to claim his £693,000 pension even if he is lawfully entitled to it.
The Labour deputy leader created a stir yesterday when she said that the former RBS chief, forced into early retirement last October ahead of a Government bailout of the banking group, could not expect to keep drawing his pension because "the court of public opinion" would not allow it. She even hinted that the Government could pass a law to claw back the cash.
“The Prime Minister has said it is not acceptable and therefore it will not be accepted,” Ms Harman told the BBC.
But asked about her comments today, Gordon Brown refused to repeat the assertion, although he told talkSport radio that the Government was investigating “every possible avenue” legally to reduce Sir Fred’s pension.
Ms Harman was also cut adrift by Jacqui Smith, the Home Secretary, who similarly refused to endorse her declaration that Sir Fred would not be allowed to keep his full pension come what may.
“The Prime Minister has been adamant that there should not be, in the banking system and more widely, reward for failure,” the Home Secretary told Sky News. “I hope that (Sir Fred) will respond to, as Harriet described it, the court of public opinion as well as the strict legalities of the situation.”
The Treasury has sought legal advice to see whether there might be grounds to challenge the pensions decision in court. Sir Fred has so far rejected Government appeals to surrender at least a part of it and said last week that Lord Myners, the City minister, approved the decision to enhance his pension pot to allow him to take early retirement at the age of 50.
Lord Myners is to be questioned tomorrow by the Treasury Select Committee, where he will be probed on the details of the boardroom deal which saw Sir Fred leave RBS with a pension pot officially declared at £16.9 million.
The former Marks & Spencer chairman, recruited by the Prime Minister only a few days before the bailout crisis, insists that although he knew the amounts involved, he was given the impression that the pensions arrangement was an "unavoidable legal commitment" for the RBS board at the time.
Mr Brown said today that the first thing to consider was the “very strange” decision by RBS to agree such a large pay-off while it was running up the biggest loss in UK corporate history.
“Second thing is you have got to look at the contracts,” he added. “Of course if it came to a court of law, we would be legally bound by the contracts that have been entered into. But I think there are aspects of the contracts that are discretionary and that is what our lawyers are looking at in much detail at the moment.”
For the Tories, George Osborne, the Shadow Chancellor, backed the use of “any legal measure” to recoup Sir Fred’s pension but accused ministers of acting too late and trying to divert attention from their own responsibility by attacking Sir Fred.
“This is a bit like trying to bolt the stable door after the horse has itself bolted. It is no good now trying to distract everyone’s attention with this synthetic anger. They had their chance to stop it and they incompetently failed to do so," he said.
Meanwhile, the Liberal Democrat Treasury spokesman Vince Cable said that the Government should present Sir Fred with an ultimatum: accept £27,000 a year - the maximum pension available for employees of bankrupt firms - or sue for the rest.
RBS, which is now more than 70 per cent owned by the taxpayer following a series of state-backed interventions, last week posted annual losses of £24.1 billion, the highest in UK corporate history.
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