UK Politics

Stripping Goodwin of knighthood 'terrible mistake' says former chancellor

Fred Goodwin
Image caption Fred Goodwin was knighted in 2004 but had the honour removed earlier this year

The decision to strip Fred Goodwin of his knighthood will come to be seen as a "terrible mistake", former Chancellor Alistair Darling has claimed.

The honour was removed from the former RBS boss in January on the advice of a Whitehall committee - a move welcomed at the time by leading politicians.

But Mr Darling told MPs the process had been "distasteful" and brought the honours system into disrepute.

He called for an investigation into how the decision was made.

In the past, only convicted criminals or people struck off professional bodies have had knighthoods taken away.

But the government said Mr Goodwin, who was knighted in 2004 for services to banking, was an "exceptional case" due to the severe impact that decisions he took at RBS had had on the bank, its staff and the British economy.

RBS got a £45bn lifeline from taxpayers in 2008 after it ran into trouble and Mr Goodwin's leadership of the bank - including its decision to buy Dutch rival ABN Amro a year earlier for £49bn - was heavily criticised in a report by the Financial Services Authority.

'Singled out'

The decision to annul the knighthood was taken by the Queen on the advice of the Forfeiture Committee - a body comprising leading civil servants such as the cabinet secretary.

Mr Darling, who was chancellor at the time of the RBS bailout, told the Commons Public Administration Committee that he did "not carry a particular flag" for Mr Goodwin but he believed the knighthood decision was unfair.

The bank boss had been "singled out", he said, when there were other members of the RBS board who had knighthoods "who had not been gone after". He suggested that politicians may have influenced by a vocal newspaper campaign calling for something to be done.

"I think the whole episode backfired," he told MPs. "It should not have been done.

"The public reaction was the complete opposite to what the government anticipated... A lot of people say we have no time for Fred Goodwin, we know what he did, but the way in which this has been dealt with was very distasteful."

In his 13 years in government, the former chancellor said he had "not come across" the Forfeiture Committee and he wanted to know how it had reached its decision.

"The thing, out of nowhere, seemed to gather momentum," he said. "I would dearly like to know what happened here. Who got this process going? How does this committee get convened? What deliberations did they have over the thing?"

'Lynch mob'

The UK had a reputation for following the rule of law and due process in such matters, he added.

"When you start to depart from that and say it was a one-off case - which it wasn't because he was not the only person you might want to look at - then you bring the whole system into disrepute... I think the government will look back in years to come and think this was a terrible mistake."

Former trade minister and CBI boss Lord Digby Jones told the same committee that the decision had the "whiff of the village green lynch mob" about it.

"I just thought to myself you have some people who in secret meet - almost everyone one of whom has got a knighthood - they decide that this person should not have one against a load of criteria that frankly, at the end of the day, it seemed to me, had been dreamt up on the spot.

"Everyone says jolly good and the mob are satisfied."

The cross-party public administration committee is looking into the purpose of the honours system and proposals to reform it.

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