£700,000 a year pension for ex-boss of Bank of Scotland

Britain's government was locked in a row yesterday over how it let the ex-boss of Royal Bank of Scotland (RBS) claim a massive pension, drawing a claim Prime Minister Gordon Brown was "asleep on the job."

Mr Brown said he was "angry" at the "unjustifiable and unacceptable" pension handed to Sir Fred Goodwin, 50, which is worth nearly £700,000 (€800,000) a year for life. Mr Brown is also taking legal advice.

Sir Goodwin, former chief executive of RBS which is now 70 per cent state-owned and announced Britain's biggest-ever corporate losses on Thursday, has refused government requests to voluntarily give up part of his pension pot.

He claims the government, specifically Treasury minister Lord Paul Myners, was aware of his pension arrangements months ago and a cut in his entitlement is "not warranted."

"I am told that the topic of my pension was specifically raised with you by both the chairman of the (RBS) group remuneration committee and the group chairman," Sir Goodwin wrote to Lord Myners on Thursday.

"You indicated that you were aware of my entitlement and that no further gestures would be required."

But Lord Myners's boss, Chancellor of the Exchequer Alistair Darling, told lawmakers that ministers only learned a week ago of the size of the pension handed to Sir Goodwin by RBS' board.

Sir Goodwin quit last October as the government stepped in to save the bank from collapse, forfeiting a year's salary that was promised in his original severance package.

The controversy over his pension prompted George Osborne, finance spokesman for the main opposition Conservatives, to claim that the government knew about the package all along and was now trying to cover its tracks.

"Gordon Brown and Alistair Darling are supposed to be looking after taxpayers' money, they're supposed to be looking after the interests of the British people and they were asleep on the job," he told ITV television yesterday.

"The problem for the government and for Lord Myners, who's a government minister, is that they knew all along about this pension," he charged.

The controversy has also put the spotlight on Mr Brown's policy of appointing to government unelected figures from industry like Lord Myners, a veteran businessman and ex-chairman of FTSE 100 companies such as retailer Marks and Spencer.

He was brought in by Mr Brown as the credit crunch hit last October.

Some commentators suggested that as a former highly paid businessman, Lord Myners might have failed to realise how politically explosive Sir Goodwin's pension would be.

The Prime Minister himself again called on Sir Goodwin to waive the pension yesterday, adding: "The anger that the public have is anger that I have as well... This is unjustifiable, unacceptable and we are going to clean up the banks so this doesn't happen again."