ClickAJob News

Sir Fred Goodwin's discretionary entitlement should not have been awarded to him by RBS, prime minister Gordon Brown has said.

The former RBS boss is refusing to give up his £693,000 pension after chancellor Alistair Darling yesterday demanded he do so.

Replying to Sir Fred's defiant letter outlining his refusal, City minister Lord Myners wrote last night: "I consider [your decision not to volunteer a reduction in your pension] unfortunate and unacceptable.

"As I made clear yesterday in our phone call, I think such an act would be appropriate recognition of the failing of RBS under your tenure."

Now the prime minister has added his voice to calls for Sir Fred to back down. He reiterated the government's determination to explore all legal options in a bid to force a reduction of the pension arrangements this morning.

"There is some discretionary element in the contract and we've got to look at what we can do," Mr Brown told BBC Radio Oxford.

"If we have the legal power to do so we believe a very substantial part of that pension should be returned."

The prime minister added: "I was brought up to believe that integrity, responsibility were the important things. We cannot suspend the rules of good behaviour for banks."

He said lawyers would have to look at the difference between any formal legal entitlements and any discretionary payments made before or since the government took over the failing bank.

RBS reported a £24.1 billion loss yesterday, the worst annual results in British corporate history.

And in his letter to Sir Fred, Lord Myners concluded: "I do not agree with your rationale for declining my request… And indeed I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award."

The government is examining its legal options as to whether it can force Sir Fred to accept a reduction.

But some, including former deputy prime minister John Prescott, believe Sir Fred's pension should be stopped even if no legal basis is established.

"The taxpayer has rescued [RBS], there's billions of pounds involved, he's not entitled to this form of pension. I believe basically – take it off him – and let him sue in the courts," Mr Prescott said on the Today programme this morning.

"It's just the sheer arrogance of it," he added. "If there was discretion, was he entitled to this pension? I don't think so."