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Harman’s bid to stop Goodwin’s pension looks like wishful thinking

The Commons Treasury Committee may be calling on Harriet Harman to explain in more detail how the Government intends to stop Sir Fred Goodwin, the former chief executive of the Royal Bank of Scotland, enjoying his £650,000 per annum pension courtesy of the taxpayer at the tender age of 50.

The Treasury Committee, chaired by Gordon Brown ally John McFall, is investigating the whole debacle surrounding the banking rescue by the Government and is due to interview this week Sir Tom McKillop, the former RBS chairman. They will be looking to McKillop to explain precisely what went on under Sir Fred’s disastrous leadership.

However, members of the committee, including Michael Fallon, a leading Tory voice on Treasury matters, are treating with total scepticism, not to say cynicism, Harman’s proud boast at the weekend that Goodwin "will not get" the £650,000 pa pension to which - mad as it may seem - he is legally entitled. There is talk that she should be called by the committee to explain herself.

"Sir Fred should not be counting on being £650,000 a year better off as a result of this because it is not going to happen," said Harman.

Even the hard-bitten Margaret Beckett (now back in Brown's government as Housing Minister) cast doubt on Harman's boast. She cautioned on Sky News against reading too much into Sister Harman’s words, largely because Goodwin had built up part of his £16m pension pot before the crash came.

"What seems to be the position is that perhaps Sir Fred has previous pension entitlement that he built up, maybe in other jobs," said Beckett.

John Prescott has called for the Government simply to refuse to continue paying the pension to Goodwin and let him sue in court. Harman sought to add weight to his argument by suggesting that Goodwin's nest-egg was not legally a pension and was in fact a form of severance pay that could be stopped. It is a flimsy piece of legal reasoning that shows Brown's lawyers are clutching at straws over Goodwin's pay-off.

As the Mole reported last week, short of introducing a special piece of legislation to rob Goodwin of his pension, it is unlikely the lawyers can find a legal way to stop him drawing it. One possible route was supplied byRoss Altman, the pensions expert, who said that if RBS had been allowed to go bust like any other insolvent company instead of being bailed out by the taxpayer, Goodwin would have been entitled to a mere £22k a year from the pension protection scheme.

Meanwhile, Harman is again accused of indulging in populist headline-grabbing for her own leadership ambitions – a charge which she is tired of denying as totally unfounded and without "an iota" of truth in it, as she put it on the BBC's Andrew Marr show yesterday. That doesn't stop it being said, Harriet.

THE MOLE: GOODWIN PENSION

FIRST POSTED MARCH 2, 2009

The Mole: Goodwin to escape with pension despite Government anger