Harman keeps up pressure on Goodwin

LONDON (Reuters) - The deputy leader of the Labour party, Harriet Harman, sent on Sunday the strongest signal yet that the government was prepared to legislate to prevent top bankers receiving bumper payouts for failure.

Britain's Deputy Labour Party leader Harriet Harman leaves Millbank after being interviewed in central London May 2, 2008. REUTERS/Luke MacGregor

The government has been mired in controversy since it emerged that former Royal Bank of Scotland chief Fred Goodwin was drawing an annual pension of more than 650,000 pounds, a sum that would take the average Briton 20 years to earn, despite presiding over the bank’s descent into effective nationalisation.

RBS reported the biggest corporate loss in British history last week and is now majority-owned by the state. Goodwin, whose ambitious acquisitions are widely blamed for the downfall, took early retirement last October.

“Sir Fred Goodwin should not count on being 650,000 pounds a year better off, because that’s not going to happen,” Harman told BBC’s Andrew Marr show.

“The prime minister has said that it is not acceptable, and therefore it will not be accepted,” she added.

“It may be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion. And that is where the government steps in.”

The Observer reported that while Goodwin was enjoying his own pension aged 50, he had made it harder for other RBS employees to take early retirement.

It said he altered the arrangements for early retirement three years ago, raising the minimum age from 50 to 55, and only then if pensions were cut by up to 40 percent.

The revelations will intensify public anger over the size of payments given to bankers whose bonus culture and risky lending practices brought the financial system to the brink of collapse.

The Goodwin saga has dominated media for the past four days and shows no sign of dying down.

Opposition MPs have said the government was at fault for signing off on Goodwin’s pension, but ministers claim they were misinformed.

Speaking to Labour activists on Saturday, Prime Minister Gordon Brown said the government was “exploring all legal action necessary to recover pension payments from those who received too much.”

By Christina Fincher, editing by Will Waterman