Goodwin treatment ‘tawdry’, says Darling

The award was “cancelled and annulled” by the Queen after a key committee found Mr Goodwin had brought the honours system into “disrepute”.

Politicians from across parties welcomed the move, which puts him in the company of Soviet spy Anthony Blunt and Zimbabwe’s Robert Mugabe.

David Cameron said it was the “right decision”, while Chancellor George Osborne insisted Mr Goodwin represented “everything that went wrong in the British economy over the last decade”.

Labour leader Ed Miliband said the punishment was “only the start of the change we need” in boardrooms.

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But some Tory MPs questioned the move, and Mr Darling, who as chancellor led negotiations over the RBS bailout, said: “There is something tawdry about the government directing its fire at Fred Goodwin alone. If it’s right to annul his knighthood, what about the honours of others who were involved in RBS and HBoS?”

Mr Goodwin received his knighthood for services to banking under the Labour government, before guiding RBS to the brink of collapse in 2008.

Honours are usually only removed from individuals who have been convicted and jailed.

But the Cabinet Office said the scale of the RBS disaster – necessitating a £45bn bailout from the taxpayer – made the case “exceptional”.