DAVID Cameron last night hailed the decision to complete Fred Goodwin's disgrace by removing his knighthood.
The Prime Minister said a key report into the failure of Royal Bank of Scotland had made clear “where the failures lay and who was responsible”.
“The proper process has been followed and I think we’ve ended up with the right decision,” he said.
The award was “cancelled and annulled” by the Queen after a key committee found the ex-banker had brought the honours system into “disrepute”.
A spokesman for Deputy Prime Minister Nick Clegg said: “It is the right decision.”
But Labour leader Ed Miliband argued: “I think it’s only the start of the change we need in our boardrooms.
“We need to change the bonus culture and we need real responsibility right across the board.”
Scotland’s First Minister Alex Salmond said “this welcome decision must also lead to a wider UK Government policy response to impose much-needed restraint over pay and bonuses on financial institutions within the public sector”.
Mr Goodwin received his knighthood for services to banking under the last Labour government, before leading RBS to the brink of collapse in 2008.
Honours are usually only removed from individuals who have been convicted and jailed. But announcing the move last night, the Cabinet Office said the scale of the RBS disaster – necessitating a £45bn bail-out from the taxpayer – made the case “exceptional”.
It added in a statement: “Both the Financial Services Authority and the Treasury Select Committee have investigated the reasons for this failure and its consequences.
“They are clear that the failure of RBS played an important role in the financial crisis of 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses.
“Fred Goodwin was the dominant decision maker at RBS at the time.
“In reaching this decision, it was recognised that widespread concern about Fred Goodwin’s decisions meant that the retention of a knighthood for ‘services to banking’ could not be sustained.” The Forfeiture Committee, made up of senior civil servants, met last week to consider the issue.
David Fleming of Unite said: “It is a token gesture to strip Fred Goodwin of his knighthood, but one which will be well received by the thousands of workers who lost their jobs during his rule.”
A spokesman for the CBI said the business community would understand the decision, adding: “Such an annulment is exceptional but unsurprising, given all of the circumstances.”
Simon Chouffot, spokesman for the anti-poverty Robin Hood Tax campaign, said: “This is clearly the right decision, but removing one man’s gong won’t repair the damage done to our economy by the financial sector.”
Unison general secretary Dave Prentis said it was “only right” that the knighthood should be annulled and called for public sector workers to be “honoured with decent pay and pensions”.