OXFORD West and Abingdon MP Nicola Blackwood has welcomed reports the Government is preparing to pay out £1.5bn to victims of the Equitable Life pension funds collapse.

Chancellor George Osborne is expected to announce on Wednesday that policyholders, who lost huge amounts when the insurer came close to collapse in 2000, will receive more than three times the £400m of compensation recommended by former Appeal Court judge Sir John Chadwick.

Miss Blackwood has campaigned on the issue since being elected, calling for a fair compensation settlement for the million people who lost their savings when the firm ran into trouble.

She said: “This is a lot more than some figures that have been suggested, and fully three times more than the Chadwick Report recommended, but we will have to wait until the Comprehensive Spending Review on Wednesday to have this confirmed and hear the details.

“As I have said before, it is scandalous that the last Government did nothing about these people when times were good.

“With Equitable victims dying daily it is vital that we act quickly to bring a resolution to the years of injustice they have suffered.”

She added: “The challenge the Government now faces is to try and find a way to be fair to both Equitable victims and other taxpayers at a time when our public finances are in such a mess.”

Mr Osborne is expected to announce £1bn of up-front compensation, with a further £500m for the worst-hit investors in the ‘with-profit annuity’ sold by Equitable Life.

But the compensation will still be a fraction of the total amount policy holders lost.