Myners failed to question RBS chief's pension deal

City Minister Lord Myners was accused of "bumbling incompetence" today after it emerged that he had failed to question the massive pension awarded to disgraced banker Sir Fred Goodwin.

Pressure on the minister intensified when the Treasury Select Committee released fresh evidence showing he had not intervened to stop the £703,000-a-year pension for the ex-Royal Bank of Scotland chief executive.

The letter from RBS's senior lawyer revealed that the taxpayer could have saved £300,000 if "Fred the Shred" had been sacked instead of being allowed to take early retirement at 50.

MPs on the committee lambasted Lord Myners for his failure to secure a better deal. According to the letter from Miller McLean, group general counsel and secretary at RBS, the bank's remuneration chief Bob Scott "summarised" the pension deal to Lord Myners on 12 October last year and emphasised it would be "substantial".

"While there were other discussions about Sir Fred's package, RBS does not believe there was any further discussion of his pension terms," the letter said. "The company has no record of whether any questions were raised about the pension terms by Lord Myners." Michael Fallon, Tory vice chairman of the committee, said it appeared to be the result of either "a nod and a wink, banker-to-banker deal between Lord Myners and Fred Goodwin" or "sheer blundering incompetence".

John Kingman, head of the Government's UK Financial Investments arm, said Lord Myners had not been told the key fact that the board had decided to offer a discretionary deal which allowed Sir Fred to retire early.