The Government has "dithered" over the Equitable Life scandal while pensioners suffer, a Labour MP has claimed.

Barry Gardiner (Lab Brent North) urged Ministers to speed up help for hundreds of thousands of people who lost savings in the firm's near collapse, in 2000.

Around a million policyholders saw up to half the value wiped off their pensions and retirement savings, after the life insurance firm admitted it could not afford to pay out the bonuses it had promised.

An inquiry by Ann Abraham, the Parliamentary Ombudsman, ruled last year that the Government was partly responsible, because of a failure to regulate the industry properly.

She called on the Treasury to compensate those affected, many of whom are elderly. But the money has not yet been paid, and 30,000 people have so far died waiting.

Speaking in a Commons debate, Mr Gardiner criticised Ministers for taking too long to set up the compensation scheme.

He said: "The situation has gone on too long. People are dying, having spent the last years of their lives worrying and being unable to afford the little niceties that they would have liked to buy for their grandchildren's birthdays.

"That is the fundamental injustice here, and officialdom and bureaucracy must take that on board.

"That is why it is essential that the Treasury move with speed and certainty to make full compensation available quickly, before any more people are unable to benefit because of the time that has elapsed while the Government have dithered."

He said: "We are talking about people who are in the later years of their lives.

"Many have been pensioners for seven, eight or more years and have found themselves in this nightmare at a time in their lives when they should be able to feel that they have got away from the stress of working life and careers."

Treasury Minister Sarah McCarthy-Fry said the Government did not accept it had a responsibility to compensate every policyholder.

But it had set up an inquiry to determine who had been hit hardest, and what sort of help they should be offered, she said.

"We intend to find a resolution with our scheme as quickly as possible, but we also need to get it right."

The Equitable Members Action Group, which represents the savers affected, has launched a legal challenge against the Government, which will come to the High Court next month.

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