Fred Goodwin is shredded: former RBS boss stripped of knighthood However, some in the City described the announcement as a "sideshow" which threatened attempts to rebuild the economy. One executive described the decision - which was formally approved by the Queen yesterday afternoon - as "bowing to the mob." There are fears that it could undermine London's international standing in the wake of the row over bankers" bonuses. Mr Goodwin - nicknamed "Fred the Shred" for his cost-cutting approach - joins a small group of discredited people including Anthony Blunt, Robert Mugabe and Lester Piggott who have been stripped of honours by the secretive Whitehall forfeiture committee. RBS had to be rescued by the Government in 2008 following a series of disastrous decisions which saw it take on assets worth more than £2 trillion and brought it to the brink of collapse. After an investment of more than £45 billion of taxpayers" money, the bank is now 80 per cent owned by the state. The forfeiture committee had resisted earlier calls to annul Mr Goodwin's honour in 2009. In a statement, the Cabinet Office said of yesterday's rethink: "This decision, not normally publicised in advance, was taken on the advice of the forfeiture committee, which advised that Fred Goodwin had brought the honours system into disrepute. The scale and severity of the impact of his actions as chief executive officer of RBS made this an exceptional case ... 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 2008-09 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. Mr Cameron welcomed the decision within minutes of its announcement. "The proper process has been followed and I think we've ended up with the right decision," he said Sir Fred Goodwin has been stripped of his knighthood over RBS debacle George Osborne, the Chancellor, added: "I think we've got a special case here of the Royal Bank of Scotland symbolising everything that went wrong in the British economy over the last decade. Fred Goodwin was in charge and I think it's appropriate that he loses his knighthood. Ed Miliband, the Labour leader, said: "It is right Fred Goodwin has lost his knighthood but it is only the start of the change we need to see. We need to change the bonus culture and we need to change the rules so we see real responsibility across the board. We should not have given Fred Goodwin a knighthood but this should not be about individuals, it is about taking the right steps now to create a more responsible capitalism. Alistair Darling, the former chancellor, said it was "tawdry" to single out one man. David Ruffley, a Conservative member of the Treasury select committee, said that the removal of Mr Goodwin's knighthood should set a "precedent" and urged people to send complaints about other honours to the forfeiture committee. Other senior bankers and regulators have also received honours. Several peers, including Lord Archer of Weston-Super-Mare and Lord Taylor of Warwick, have kept their peerages despite being convicted of criminal offences. Matthew Hancock, a Tory MP and former aide to George Osborne, said: "A knighthood granted by Labour for 'services to banking" was clearly indefensible and it should have been returned long ago. Of course stripping Fred Goodwin of his title doesn't solve the problems he caused while chief executive of RBS, but it does mean an important principle has been upheld and one which matters deeply to the British people: the principle of just rewards. John Redwood, the Conservative MP, said he thought it would be a "very popular move." "I quite understand why this independent committee of officials took this view because Mr Goodwin was censured by the regulator," he told the BBC. "As his citation was for 'services to banking" nobody could claim that Mr Goodwin's operations . . . have been successful. They have been mightily expensive to his shareholders and to the wider nation. Alex Salmond, the Scottish First Minister, who backed RBS's disastrous takeover of ABN Amro at the time said last night: "This is the correct decision." Other senior politicians including Lord Jones, the former trade minister, and Mark Field, the MP for the City of London, said that attention should also focus on the pension with which Mr Goodwin walked away from the bank. "I think there is the faint whiff of the lynch mob on the village green about this, but that isn't to say that the end result isn't what is right," Lord Jones said. Mr Darling, writing in The Times, 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?" Angela Knight, head of the British Bankers" Association, said that the economy faced bigger problems than Mr Goodwin's knighthood. "Independent surveys put lack of confidence as our main problem," she said. This is partly down to the eurozone and the fact that everything looks so uncertain. We're seeing political rowing going on constantly. That's got to stop, and we need to concentrate on growth and confidence. Business groups welcomed the decision but senior City figures hope that the loss of Mr Goodwin's knighthood will end what is increasingly seen as a "witch hunt" against bankers. David Buik, of brokers BGC Partners, said Mr Goodwin had become a "political hot potato" amid what he described as "angst and ridiculous hatred." Sir Jackie Stewart, a friend of Mr Goodwin, asked: "Does this mean that any person who has received an honour of any kind can be stripped of that honour if their past or future business fails?" The forfeiture committee is chaired by Sir Bob Kerslake, who phoned Mr Goodwin at 3pm yesterday. Officials said its decision was based on a report into the collapse of RBS by the Financial Services Authority, the City regulator. The public copy does not directly criticise Mr Goodwin but the regulator had severe doubts over his management. There is no right of appeal. The banker was not allowed to appear before the forfeiture committee but was invited to explain why he should keep his knighthood. He is understood not to have taken up the offer.