Ministers were celebrating today after Harriet Harman found a way to stop Sir Fred Goodwin from taking his £693,000 per year pension. The issue had been a thorny one for the government because ministers had been complicit in the deal which led to Sir Fred standing down from RBS in October and becoming eligible for the huge pension.
Now the problem has been solved. Ms Harmon's background in law is thought to have been an important element of the solution, and careful reviews of the contracts have been carried out.
In April, Sir Fred Goodwin will be reinstated in his old job on a salary of £690,000 per annum. However, due to the appointment of Stephen Hester as Chief Executive last October, job sharing will be initiated, and Sir Fred will only be required to work from home on alternate Fridays. The pension will no longer be payable.
It is hoped that the combination of Sir Fred's experience in running RBS through its 'problem period' will combine well with Mr Hester's experience at Northern Rock.
It is not known what provisions have been made in the deal for performance-related bonus payments to Sir Fred.