Fred the Shred - my part in his ultimate downfall

Tuesday, 7 February, 2012

At Prime Minister’s Questions in the Commons a couple of weeks ago I decided to ask David Cameron when he would convene the Honours Forfeiture Committee to consider the case for stripping “Sir” Fred Goodwin of his ill-deserved knighthood.


This was a result of my tireless trawling through the 500-page City watchdog report into the Royal Bank of Scotland banking collapse.


As a senior member of the Treasury Select Committee (the Grand Inquisitor body I was elected to by colleagues) I wanted an answer to a burning question asked by so many (rightly) irate Suffolk taxpayers.


Like most people, I believe if you are placed in a position of authority you should be prepared to face the music when things go wrong. That is, be accountable for your



Why should the RBS chief executive, who presided over the biggest corporate disaster in British history, get off scot-free? He’s not been sued. He’s not been prosecuted. Instead he waltzes off with a £350,000 a year goldplated pension for the rest of his life.


No wonder the public have been incandescent with fury. They have every right- every UK household will be coughing up £2,000 a head for the bail-out of RBS.


So when Cameron revealed to everyone’s surprise that the Forfeiture Committee was meeting that week, the national media beat a path to my door asking what this was all about. I’d set a hare running.


I knew that the Forfeiture Committee, consisting of senior civil servants and Government lawyers, had the power to strip Goodwin of his knighthood.


Few people even knew of the existence of this shadowy committee composed of “Sir

Humphrey” Whitehall mandarins.


I had, by my Prime Minister’s Question, put the pressure on them.


To be frank, I thought these risk-averse civil servants would not have the guts to make the controversial decision. After all, before this month they’d only ever stripped a man of his gong for treason (Anthony Blunt) for crimes against his people (Robert

Mugabe) or after being gaoled for fraud (Newmarket’s very own Lester Piggott).


But my researcher revealed that a knighthood could not only be revoked if the holder had been convicted in court of a crime; technically it could be revoked on the much vaguer ground that he had been “censured”.


I wasted no time in briefing the press that my Treasury Committee judged Goodwin to have been “censured” by the City regulator. The more this idea was in the press, I calculated, the more public pressure would mount on mandarins not to bottle the decision.


So it was with some satisfaction that days later Whitehall announced Fred The Shred would be plain “Mister” Goodwin in future.


Alistair Darling has criticised the decision as “tawdry” and accused the government of singling out individuals. Head-to head against Darling on Sky TV I said there should be no rewards for failure.


I repeated, when I was interviewed on Radio 2’s Jeremy Vine show, that as a stout

defender of enterprise and small business I believed that if you reward failure you undermine the values of hard work.


Although I do not want the state to micro-manage the banking sector, it is important that bonuses are responsible and not excessive.


The bankers’ bonus culture – particularly in the City- has gone further than is justified by their contribution to the real economy - that is the economy of counties like Suffolk.


Additionally, I support the Government’s introduction of a bank levy on bank balance sheets to encourage banks to move to less risky funding profiles. This is the best long-term tax to ensure the banks pay their fair share.


But more must be done. The removal of Goodwin’s knighthood should set a

precedent, meaning that we look at other parts of the City, business and politics.


This must not be a one-off political gimmick. Top executives must be responsible and exercise restraint. That is why I am calling for there to be an inquiry into the

Lloyds HBOS collapse and the last Government’s stitched-up takeover by Lloyds of HBOS.


There have been allegations claiming that the Government and Lloyds deliberately hid information about the state of HBOS finances from shareholders.


Stripping Goodwin of his knighthood should not be the end of the story. The banking sector is over-represented in the honours list and once an inquiry into HBOS has been carried out, members of the HBOS and Lloyds’ board currently holding honours

must be held to account.


When I was speaking on Radio 5 live over two weeks ago, I said that the Chancellor should intervene and urge Stephen Hester to give up his bonus.


Happily within a day the Royal Bank of Scotland boss rightly gave up his million pound bonus. And a few days later even the current Chairman of RBS admitted that bankers as a class were overpaid for what they did.


Ultimately, if we are to restore public trust in free enterprise we must restore respect for banks. That means we must entrench accountability, responsibility and transparency to the actions of those at the top.


So was Goodwin’s humiliation “mob rule”? No, it was justice