‘Bad cases make bad law’ (Law 101). I have read many contracts and I have never ceased to be amazed at the casual approach to important contractual issues displayed by relatively high-paid executives in both private and public life. The reaction to Sir Fred Goodwin’s pension fiasco among members of the Government is born of the panic to remove him as quickly as possible as the fall-guy for the whole sorry mess.

The more the bank bosses were and are portrayed as culpable, the less the public would blame the Government, or so the politics of pass-the-parcel blame game feels like since last October. This Government is obsessed by being seen to be ‘doing something’, allegedly better than ‘doing nothing’ (though ‘doing right’ is the better strategy).

The ‘mere’ details of the severance arrangements slipped from view. Competent negotiators often say: ‘If you’ve got it in writing you’ve got a prayer; if it ain’t in writing you’ve got thin air.’  Sir Fred got it in writing. Lord Mandelson, the Chancellor, and the Prime Minister didn’t, and neither did their talented advisors. Double worse, it has come to light, and now they are squirming in deep manure.

Their reaction? As ever, they panic!  Harriet Harman threatens to over-ride the law because the Prime minister says so. How? By passing a new law, or introducing a new tax on high incomes, or perhaps something in the anti-terror laws, or how about the wartime laws on the seizure of German assets? Or don’t pay him and await his writ in the courts?

In short, more panic, more short-termism, and more of what got us into this mess.

Professor Gavin Kennedy is a fellow of the Adam Smith Institute and writes regularly here