Hamish Macdonell: Public want a hate figure. But you can't blame it all on Sir Fred

Published on Monday 2 March 2009 20:49

LYNCH mobs are never particularly pleasant. They tend to be made up of the gullible and fearful led by smarter people who really should know better.

The current hounding of Sir Fred Goodwin over his pension is a case in point. The vitriol and anger that has been poured on to the head of the now disgraced banker is the modern equivalent of a mob turning up on Sir Fred's well manicured front lawn armed with fiery torches and pitch forks. The only difference seems to be that today's mob are shouting "strip him of his pension" rather than "burn him".

This is not to say Sir Fred is not culpable for what has happened to Royal Bank of Scotland. There is understandable fury among employees and shareholders at the collapse of this once towering institution.

That anger is justified but, in a mature, democratic society, surely we should be looking at sensible, long-term solutions to the problem rather than identifying, vilifying and scapegoating one individual?

The key role here is being played by the UK government. At a time when proper leadership is required, the behaviour of ministers, from the Prime Minister down, has been nothing short of reprehensible.

Gordon Brown decided to jump on a populist bandwagon and make it clear he would be seeking the return of some of Sir Fred's pension. Harriet Harman, showing that she would never knowingly allow good sense to stand in the way of her leadership ambitions, went even further and suggested the government might legislate for the return of some of Sir Fred's pension.

The message from both the leader and the deputy leader of the Labour Party was clear: "We cannot be seen to be rewarding failure." Fair enough, so let's take that through to its logical conclusion then.

One of the major criticisms of Sir Fred's pension settlement has been that he has been able to take it from the age of 50.

When Tony Blair stepped down from No 10 in 2007 at the age of 54, he started collecting an annual pension of 64,000 from the taxpayer – despite his ability to make millions from other lucrative positions. It could easily be argued that Britain's involvement in the Iraq war represented a pretty big failure on his part, possibly big enough for him to forego some of his pension.

When Mr Brown is removed from No 10 next year by the electorate, he will be some way off his normal retirement age of 65, but he, too, will be in the privileged position of getting a generous pension.

He has changed the rules, so he will not be taking as much as Mr Blair did, but Mr Brown's pension pot – paid for the taxpayer – will nevertheless be sizeable.

Critics might suggest that Mr Brown played a more central role in plunging the UK into its biggest financial crisis since the 1930s than Sir Fred did – after all, he was Chancellor of the Exchequer through the years of light-touch regulation and aggressive risk-taking by the banks.

So, if we are not going to reward failure in the future and we are going to start stripping people of their pensions, even when there is no evidence that they have broken the law, then it should be universal.

Politicians cannot put others in the stocks of public opinion unless they are willing to face the same sanctions themselves.

If this is really what Mr Brown wants, then he should let the people decide. If the electorate concludes Mr Brown has failed at the next election, then he, too, should be stripped of his pension, if that is the way he wants to play it. But he knows that this is a very dangerous road to go down.

Whatever Mr Brown has done to the economy, most people don't want him stripped of his pension, because that would be mean, vindictive and wrong.

However, in exactly the same way, it is mean, vindictive and wrong for government ministers to lead the mob to Sir Fred's front door, handing out pitch forks as they go.

There is also, however, a much wider issue here, which is in danger of being lost in the furore over Sir Fred's pension. What the government has done is to successfully personalise this complex and amorphous issue of banking failure, turning Sir Fred into a hate figure of unparalleled proportions.

Those other directors of RBS, those who signed his bonus cheques and patted him on the back as he brought in bigger profits and fatter dividends every year, are hiding from view, rather unchivalrously, while the ordure is being hefted in the direction of their former chief executive.

Of course Sir Fred is to blame, but he is not alone. We should be asking questions of all the directors, executive and non-executive, who closed their eyes and pocketed the cash in the good times without worrying about what was really going on. That is a much harder target to hit, but that is what responsible ministers should be doing.

After all, Sir Fred was brought in and instructed to go out and make RBS a global brand. He did what he was told and lined the wallets of those who employed him while he did so. Yes, he got it spectacularly wrong; yes he has caused pain and suffering, and yes, his pension settlement seems obscene. It is perfectly understandable that some people might call for his pension to be returned, but that is not the role of the government.

Banks have imploded across the western world because too many people got too greedy and rewarded themselves for taking on debts that should have been rejected. It happened across the board, and politicians and regulators let it happen.

Now, to deflect attention away from their own part in this debacle, our leaders are not just letting it all fall on one man, they are urging the public to blame one man: and that is the most cynical and least statesmanlike approach that the government could have taken in these circumstances.