Peace offer to rebel MPs

Ministers have offered a last-minute compromise with rebel MPs in a bid to head off a major backbench rebellion over pensions next week.

More than 200 Labour MPs could vote against the Pensions Bill unless the Government agrees to compensate thousands of workers who lost company schemes when their firms collapsed.

The Work and Pensions Department hopes to appease them with a Government amendment pledging to revisit the issue when the Bill goes through the Lords.

But some MPs may still back a rebel amendment by Kevin Brennan of Cardiff West, who wants immediate help for the estimated 60,000 who lost out. "MPs are being asked to vote for a pig in a poke," one said.

Most of those affected come from firms like Allied Steel and Wire in Labour's Welsh heartland. Compensation could cost over £2 billion - £76million a year for 30 years.

This has caused a rift between Chancellor Gordon Brown and Pensions Secretary Andrew Smith, who had hoped to resolve the row before next Wednesday.