'It Wasn't My Fault'

While there are some who wonder just what a 'City Minister' does, I for one am feeling very sorry for Lord Myners who yesterday gave a 'robust defence' of what appeared to be gross incompetence in the 'Fred Goodwin Pension Fiasco' which faces the Government.

"I was assured the pension arrangement for Sir Fred Goodwin reflected 30 years of service," said Lord Myners yesterday as he mounted a very sound defence of his actions in the lead up to the fiasco in the Lords. The fact it sounded as a forlorn defence against the gathering cloud of Brown and Darling revisionism regarding the truth of the affair in order to appoint a scapegoat made it all the more poignant.

Just Doing His Job

Of course, if you are an ex-City type yourself and the Government is being advised by a horde of Investment Bankers at extreme cost to the taxpayer, then no one would quibble about a 'fair pension' after 30 years service to one of their own. And £693,000 per year doesn't sound much in the great scheme of the fantastic numbers that are being thrown about in the bank bail outs, after all it was commensurate with his final salary.

But as Harriet Harman has seized upon, such an embarrassing number is vote winning if something can be done about it in retrospect. It becomes even better if a specific individual, not directly related to the Government hierarchy, like Lord Myners, can be blamed for it. Then they have a scapegoat as well - perfect - and Harriet knows it. By mentioning it herself over the weekend that Sir Fred should 'not count on' keeping his pension, the Government and specifically Harman, seems hell bent on spending any sum of money to block him having it and so gaining the public's confidence that they are acting in our interest, not just being totally incompetent as it it appears. Harman also advances her public stock for a future leadership challenge.

How Did Fred Get Away With It?

The villainous Fred Goodwin, as he is now portrayed by the Government (and it will come as a source of some glee to Harriet Harman that Goodwin was a close ally and friend of Gordon Brown and his retinue of famous Scots now seen to be on the make), is the man who seems to have hoodwinked a raft of lawyers, Board members, Ministers and banking advisers and got away with a fabulous pension it is now deemed he does not deserve.

Myners claims that in fact he did not meet with Tom McKillip, the RBS Chairman, and Bob Scott, a Non Executive Director, who were charged with negotiating Goodwin's exit package (and hardly likely to be nasty to their old boy), until after they had already agreed Goodwin's exit package and they told him only that Goodwin had been given a pension reflecting his 30 years service. No warning bells here then, as Goodwin had agreed to waive his entitlement to 15 months salary - which on the face of it was cheap as Peter Mandelson had got a 3 year pay off from the EC when he was appointed Business Secretary which the taxpayer pays for.

At the meeting, Myners was accompanied by a Government lawyer who trotted out a 'standard script' to set out the Government's position. Myners also says he told McKillip and Scott that "In exchange for support, there would be no reward for failure. We would expect Boards to minimise the cost of severance."

The problem was that Goodwin, although being forced out, was leaving as an early retirement not as a sacking. So McKillip and Scott were acting on that path - the Government did not have the balls to say Goodwin should be summarily sacked and receive no compensation or pension. The let-off was all of their own making. Goodwin, by waiving his pay off, was actually being perfectly fair in insisting on his pension rights after 30 years of service, the maximum under the company scheme.

All the facts were staring everyone in the face - they knew his salary, they knew his length of service, they knew what he was entitled to it.

So why has it come as such a shock as to how big the pension was?

Taking A Hit For The Team

The ground is being prepared for Myners to be sacrificed brutally in the wake of the affair. Alistair Darling is already sloping his shoulders and has sinisterly warned that the Ministers must have the 'humility' to admit mistakes. If that were the case we wouldn't have the time left in the Universe to hear them and the associated excuses, but the pointed remark was for Myners alone.

He was expected to fall on his sword or be roughly pushed on it very soon.

Myners, though, was having one of it as his Lords statement showed. He claims that he knew Goodwin would get a 'large sum' but not how large that was. It wasn't an issue at the time - he had negotiated Goodwin out as he was told, avoided the embarrassment of a pay-off, surely Goodwin could have a fair pension to live on?

Locking The Gate After The Horse Has Bolted

Gordon Brown has confirmed his sudden rabid hatred for the man he was so friendly with not a few months ago by confirming he has instructed lawyers to find out how much of Sir Fred's £16m pension pot can be kept away from him. It is too little, too late, naturally and an expensive way to solve a problem that with just a modicum of foresight and attention to detail, he could have prevented beforehand.

There are no real excuses here. Everyone was involved in the bail outs, everyone was involved in the specific task that surrounded RBS, everyone knew the stakes they were playing with. Everyone knew the size of the salaries of these individuals from Sandler to Goodwin to Hornby - they knew the kind of money they could be entitled to beforehand - this is not rocket science and it is not an unknown quantity as it is at the very heart of the entire problem identified in the City. The rewards are just too high.

So bleating afterwards about Goodwin's pension is just a smokescreen and by saying that Ministers were not aware of it is just compounding the issues we face on bail outs. If you do understand the basic figures that make up the huge numbers in the City, then you cannot possibly know how much the big numbers you throw at the problem are going to affect it.

I return to a common point. This Government, from start to finish, had no idea about the economy and how it was functioning and they have far less idea about how to remedy its collapse. This whole saga about one man's pay off is absolutely indicative of how little they know or care in their blind panic to try and rectify a situation they made for themselves.

Now we have the unseemly clamour for the scapegoat. Personally, I think Brown, Darling and Cooper should go along with Myners - they couldn't organise a party in a brewery, least of all a bank bail out.