City Minister, Lord Myners, said he did not "endorse" the £693,000-a-year pension of former RBS boss Sir Fred Goodwin. Speaking in the House of Lords, the minister mounted a vigorous defense of his own role in the affair, insisting to fellow peers that he had not been told exactly how much Sir Fred would be paid. However, Myner did acknowledge that he had been aware that it would be a ‘large sum’. "We would expect the boards to minimise the cost of any severance that would arise and we would expect those who were departing from the banks to mitigate to the maximum possible amount the cost of their departure," insisted the Minister, who also said that he respected legal commitments and the rule of law and would not expect any company to break any legal and contractual agreement to which it was committed.

Deputy Labour Party leader, Harriet Harman, said Goodwin should not "count on" keeping his full pension, describing the settlement - agreed by the RBS board - as "money for nothing". Ms Harman said “it might be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion and that is where the government steps in.”

The prime minister has also weighed in, instructing government lawyers to scrutinise Sir Fred's contract to see if any of his £16m pension pot can be withheld. Top City law firm Slaughter and May to supply an opinion on its options. However, Mr Brown played down Harman’s comments, saying: "Of course if it came to a court of law, we would be legally bound by the contracts that have been entered into. But I think there are aspects of the contracts that are discretionary and that is what our lawyers are looking at in much detail at the moment."

But short of an Act of Parliament to somehow expropriate one man's pension arrangements, the government may be heading up a blind alley. Chairman of UKFI, Glen Moreno, the man in charge of taxpayers' stake in Britain's banks, says Goodwin's pension was "a reward for failure". Moreno, giving evidence to the Treasury Select Committee, described the ex-RBS boss' £16.6m pension pot as a "golden parachute" and said the Government had been unaware of all the facts when it signed it off.

The pressure on the RBS boss continues to mount, with the media portraying him in the role akin to Public Enemy Number One. Already a Scottish MP is calling for Sir Fred to be stripped of his knighthood. It has also emerged how RBS is still paying personal security costs for Sir Fred, providing CCTV monitoring of his Edinburgh home and security staff to keep photographers at bay!