(Deputy) PMQs: Vince tackles Harriet on Fred Goodwin's pension

by Stephen Tall on March 4, 2009

With the Prime Minister off gigging at the US Congress, it was left to Harriet Harman to stand in at Prime Minister’s Questions, and face interrogation from Vince Cable for the Lib Dems and William Hague for the Tories.

This was undoubtedly a pretty weak performance by Ms Harman (though, somewhat bizarrely, she has been lauded by the Guardian’s Nicholas Watt), who managed to come across as both flakey and humourless. She was heavily reliant on her official briefing and proved unable to think on her feet – in short, she was a perfect stand-in for Gordon Brown. However, I think Tories’ joy at Mr Hague’s performance is over-done: his performance was just as it was when he was Tory leader, polished and glib. Add that to the unpleasant braying of Tory backbenchers, and the overall impression is scarcely a positive one for the official opposition.

Vince was serious and sonorous, punchily asking some important questions about the pensions awards received by executives of the recapitalised banks. Ms Harman put forward a much more considered reply today than she managed at the weekend, under strict instructions from her boss no doubt not to make more over-hyped promises to legislate against an individual’s pension agreement.

You can watch proceedings via the BBC here, and read the Hansard transcript of Vince’s questions below:

Dr. Vincent Cable (Twickenham) (LD): May I add my condolences to the families of Marine Laski, Rifleman Gunn, Lance Corporal Upton and Corporal Gaden, who all died serving their country on 25 February; and also to the victims of the Sri Lankan atrocity.

As the Leader of the House is a former pensions Minister and Law Officer and, I believe, a trained solicitor, she is exceptionally well placed to understand pensions law. Instead of the rather eccentric proposal for a “Harriet’s law” to stop Sir Fred Goodwin’s pension, would it not be more sensible for the Government to use existing legislation under which pensions can be forfeited in cases of employee negligence, which is surely the case with Sir Fred Goodwin, Adam Applegarth of Northern Rock and the others who bankrupted their banks?

Ms Harman: Perhaps I can update the House on this matter. The Government have asked United Kingdom Financial Investments to investigate all the circumstances surrounding the contract for Sir Fred Goodwin’s pension, including the extent to which it was discretionary and including whether or not the people who took the decision had all the facts on which they could take it. That, too, bears on the enforceability of the contract. We are absolutely clear that it is not acceptable and we are taking all steps to challenge the enforceability of the contract.

Dr. Cable: I think that the right hon. and learned Lady is missing the point. The issue is not whether the pension is £400,000 or £700,000; the issue is why it is being paid at all. Is this not part of a much bigger issue? There is growing anger in what she calls the court of public opinion not just about the pension and remuneration of those who are now public sector employees, but about other public sector fat cats, including senior civil servants and, dare I say it, Ministers, and their very lavish and generous pensions. Does she recognise that anger, and what is she proposing to do about it?

Ms Harman: I think that we do recognise that concern. In particular, there is concern about the question of remuneration in the financial services industry because it has been part of encouraging short-termism and risk-taking. As well as looking at the contractual basis of Sir Fred’s pension, we have also asked the Financial Services Authority and the Walker commission to look at how we tackle and improve the remuneration regime as part of corporate governance.

When it comes to the banks squandering their customers’ money, there is one thing that perhaps I ought to add. I discovered that it was not only Sir Fred who was getting money off RBS; it was also the right hon. Member for Richmond, Yorks (Mr. Hague), who got £30,000 off the Royal Bank of Scotland, it turns out, for just two after-dinner speeches.”