Sir Fred Goodwin, the man who was in charge of the bank that made the biggest loss in UK corporate history, is not a popular man. Fair enough – we shouldn’t exactly be showering someone with praise when they lose £24bn and burden the taxpayer with exposure to risk on hundreds of billions in ‘toxic assets’.
Moreover, it does seem strikingly unfair that he is ‘rewarded’ for this failure with a pension package amounting to £12,000 a week for the rest of his life on some estimates. On all accounts, Sir Fred fucked up. He lost RBS £24bn, cost the taxpayers potentially far more, and has been rewarded with early retirement and a hefty pension package.
It wouldn’t be too ridiculous for the public to demand that the government does something to stop situations like this from occurring. But what is ridiculous, is the notion that we should abandon all our democratic principles to satisfy a temporary, transient, furore in public opinion.
We must not attempt to ‘claw back’ Sir Fred’s pension, and here is why:
Firstly, attempts to do so are completely ignoring the wider problem. Even if we chuck Freddy out on the street and regain all £16m of his pension pot, we are still up shit creek without a paddle. Look at the numbers, people! The loss this year at RBS was £24bn, the exposure to toxic assets taxpayers face is in the hundreds of billions of pounds. Sir Fred’s pension pales into insignificance in comparison. Government time is better spent on other things.
Some might say that it is the principle of the thing that matters – that it is an unfairness, and thus the fact that correcting it won’t solve our wider problems is irrelevant. But, as I’m about to point out, we have a lot of important and varied principles that we like to act in accordance with, such as the rule of law. If we’re really going to act ‘on principle’, then Sir Fred should be allowed to keep his money.
Something Harriet Harman said recently on this matter brings this into sharp focus:
“It might be enforceable in a court of law, this [pension] contract, but it is not enforceable in the court of public opinion and that is where the government steps in.”
I almost choked when I read this – I mean, is she kidding? What she is saying amounts to a statement that the law is irrelevant in the face of momentary shifts in public opinion. It is an utterly shocking view, completely contrary to the rule of law, a founding tenet of any democracy. The law must apply equally to all citizens. You can’t make an exception because you think someone is a bit of a tosser. Sir Fred did not break any law, as far as we know, and his pension is (at least now) a contractual obligation. It might be regrettable that he got it, but should the government intervene now it will be acting arbitrarily and in contravention of some of our most basic democratic principles. Perhaps it will find some loophole and manage to get some of the money back in a legal manner, but this still doesn’t change the nature of what they are doing, which is attempting to make exceptions to the law in response to public opinion.
This must be made clear – the Government is acting in a totally self interested manner. If Gordo et al really cared about this kind of unfairness, they would be legislating to prevent it happening in general – but that wouldn’t help them much with Sir Fred, because the new law presumably couldn’t apply retroactively. What they are really trying to do is score points with the media. It’s cheap, it’s nasty, and it devalues our democracy.