Gordon Brown has just spoken out on Radio Oxford about Fred the Shred’s pension. This is what he said…

When it comes to this pension it is completely unacceptable and that’s why I’ve said we’re considering every means at our disposal to take legal action if it happens that after the pleas of the public Sir Fred is not prepared to reduce his pension entitlement. I think you’ll find, although we don’t have all the evidence yet, that there is some discretionary element in the contract and that we’ve got to look at what we can do and if we have the legal power to do so we believe that part or a very substantial part of that pension should be returned. When we moved in to buy shares in the Royal Bank of Scotland, certain contracts had been signed with legal basis to them and what we are trying to do is look at what is the difference between if you like the formal legal entitlements before we started to be involved in this and any discretionary payments that had been made either before or since and that’s what we’re trying to get to the bottom of.

When you’re dealing with private companies that you’ve had to take action upon it’s a very difficult thing because the government doesn’t want to run banks, we don’t want to be on control of banks, we want banks to manage themselves under a regulatory and supervisory system where they can show integrity and honesty and build trust and show responsibility but when we have to intervene we’ve got to do what I believe is the right thing so we’ve got to cut out the bonus culture which was…the bonus culture was based on short term deals. It wasn’t being built around long-term success and I know that some people within the banks are angry about that but it’s got to change and equally if you’ve got a board member that doesn’t understand what the board is doing and can’t hold the chief executive accountable, that board member should not be on the board and that’s why the banking system of putting people on boards who don’t necessarily know what they’re doing has sometimes come to grief and as far as the pension is concerned there is a limit to what we can do in terms of legal entitlements but as we now know there may have been a discretionary element in this pension and it’s right to say that if there was a discretionary element, given that the bank that’s concerned had the biggest losses ever in the corporate history of our country, it’s quite wrong for additional or discretionary entitlements to be given.

We set up the Financial Services Authority to, you know before we came into power there was a sort of self regulatory system so you know they more or less regulated themselves. We brought in a statutory regulatory system, supervisory system, but of course we couldn’t know exactly what was going on in every individual bank and it’s only in the last few days to be honest that what has happened over this pension has come to light. When things come to light that have been done we will make it absolutely clear that our intention is to clean up those parts of the banking system that are unacceptable. Now we’ve got great banking employees also round the country, ordinary staff who are doing a great job every day serving the customers and they too want a banking system that people can have trust in and where there are excesses they are cleaned up and that’s exactly what I’m doing. You know I was brought up to believe that integrity and responsibility were the important things, that you cannot suspend the rules of good behaviour for banks or for some aspects of the economy. We’ve got to apply them and now we have evidence of what has been happening we’ve got to take the action to clean up the banking system and that’s what we’re going to do.