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Government to pay £1.5bn compensation on Equitable Life

Equitable's near collapse ten years ago is estimated to have affected about 1.5 million savers.

The UK government will announce a compensation of £1.5bn for those affected by the near-collapse of mutual insurer Equitable Life, say reports.

The figure is more than three times that recommended by the government-commissioned Chadwick review released earlier this year, but only about a third of the compensation (£4-5bn) recommended by the Parliamentary Ombudsman in 2008.

The details of the reparation will be revealed as part of the government's Comprehensive Spending Review on Wednesday.

Equitable's near collapse ten years ago, after it failed to build up sufficient funds for guaranteed payouts on some of its pensions, is estimated to have affected about 1.5 million savers.

The Telegraph reports that although the compensation to be announced would not come close to the estimated loss of between £4bn and £4.8bn for policyholders, it will be targeted in order to give higher returns to savers rather than wealthy investors.

About £1bn of the compensation is expected to be allocated as up front payments immediately following the spending review, while £500m will be reserved for with-profit annuity holders, to be paid over time.

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Labour tensions boil over at fractious MPs' meeting

Corbyn supporters and critics clash over fiscal charter U-turn and new group Momentum. 

"A total fucking shambles". That was the verdict of the usually emollient Ben Bradshaw as he left tonight's Parliamentary Labour Party meeting. His words were echoed by MPs from all wings of the party. "I've never seen anything like it," one shadow minister told me. In commitee room 14 of the House of Commons, tensions within the party - over the U-turn on George Osborne's fiscal charter and new Corbynite group Momentum - erupted. 

After a short speech by Jeremy Corbyn, shadow chancellor John McDonnell sought to explain his decision to oppose Osborne's fiscal charter (having supported it just two weeks ago). He cited the change in global economic conditions and the refusal to allow Labour to table an amendment. McDonnell also vowed to assist colleagues in Scotland in challenging the SNP anti-austerity claims. But MPs were left unimpressed. "I don't think I've ever heard a weaker round of applause at the PLP than the one John McDonnell just got," one told me. MPs believe that McDonnell's U-turn was due to his failure to realise that the fiscal charter mandated an absolute budget surplus (leaving no room to borrow to invest), rather than merely a current budget surplus. "A huge joke" was how a furious John Mann described it. He and others were outraged by the lack of consultation over the move. "At 1:45pm he [McDonnell] said he was considering our position and would consult with the PLP and the shadow cabinet," one MP told me. "Then he announces it before 6pm PLP and tomorow's shadow cabinet." 

When former shadow cabinet minister Mary Creagh asked Corbyn about the new group Momentum, which some fear could be used as a vehicle to deselect critical MPs (receiving what was described as a weak response), Richard Burgon, one of the body's directors, offered a lengthy defence and was, one MP said, "just humiliated". He added: "It looked at one point like they weren't even going to let him finish. As the fractious exchanges were overheard by journalists outside, Emily Thornberry appealed to colleagues to stop texting hacks and keep their voices down (within earshot of all). 

After a calmer conference than most expected, tonight's meeting was evidence of how great the tensions within Labour remain. Veteran MPs described it as the worst PLP gathering for 30 years. The fear for all MPs is that they have the potential to get even worse. 

George Eaton is political editor of the New Statesman.