Sweden, which takes over the European Union presidency next month, is apparently lukewarm about the tough line being pursued by the EU and most major European governments. According to a report in The Guardian yesterday, the City minister Paul Myners, is off to Stockholm later this week after it emerged at the meeting of G8 finance ministers in Italy over the weekend that Sweden does not support a harsh, centralised regime for hedge funds, derivatives and private equity envisaged by the supporters of the Larosiere report, which has so far been the main reference point for the reform debate in Europe. This is probably because Sweden has a successful private equity sector that government and unions feel comfortable with and they fear that heavy-handed centralised regulation could stifle it.

I was struck by a certain naivete in FSA chairman Lord Turner's comments to The Guardian: "If one was absolutely confident that European supervision was going to be completely politics-free, in a neutral, technocratic fashion, we would be more relaxed about it". Politics-free? I don't think so. Vast sums of public money have been poured into the financial system and politicians and the public expect some accountability to go with the unprecedented response to the the business and regulatory failures that threw the world's financial system into chaos. We will be paying for this with cuts in public spending and high rates of inflation for most of the next decade so politics will play a very big part in the debate about the future of financial regulation.

Back to the European debate and it is going to be an interesting six months as the country that holds the presidency usually has alot of say over the priorities and the pace at which issues progress so you can see why Lord Myners is rushing off to smooth talk the Swedes. There is, however, pressure to maintain the pace of the reform programme and even the Financial Times lined up yesterday on the side of those who want swift, effective and lasting reform.

As I have said before, it is a really tough call to expect government ministers over that cataclysmic weekend of 12-13 October to have set aside time to scrutinise the details of the severance package offered to Goodwin. Had they done so and spotted that the RBS board was pulling a fast one by enhancing his severance package (I'll return to that point later) but allowed the crisis gripping the banking system to spread even further we would have had genuine cause for complaint.

If I was Lord Myners I would now be wondering what some of my Treasury officials were up not to flag up some serious concerns over the Goodwin deal and perhaps I might have wondered at the time why it was being dressed up as early retirement for someone only in his early 50s. The fact that he was alerted to the possible size of the pensions pot is not really that important as there would have been so many multi-million and multi-billion pound numbers being thrown around that weekend you can understand why this one didn't make an impression. It would be nice to think that Lord Myners would have had a moment to pause to reflect on the RBS board's proposal and say to them that it should wait a couple of days as it needed further thought but we do not live in an ideal world.

I think the Tories have been duped by the RBS and Sir Tom McKillop's letter yesterday into thinking that they now have an easy target in Lord Myners. The real target remains the RBS board and its remuneration committee. It is at the very least disingenuous to claim that there was no enhancement to the deal offered to Goodwin. They didn't have to offer him early retirement: indeed, there is no real reason why it should have been viewed as any sort of retirement. Goodwin's incompetence at the helm of RBS had steered it to disaster. Most chief executives in that situation get offered a paid up contract, possibly with a little boost to their pension fund alongside and often this appears too generous a reward for failure. That should have been the starting point for getting rid of Goodwin and why it wasn't should be the question politicians should pursue.

We have a culture of rewarding senior executives for failure in this country and we need to challenge that if we are to re-build industry and the financial services sector out of the havoc of the current economic storms. Sadly, it seems that the Tories, who now view themselves increasingly as a government-in-waiting, have no appetite for doing that.