Conservatives and Liberal Democrats yesterday vowed to fight on for more generous compensation for people who lost pension benefits when their employer went bust, taking their campaign to use unclaimed pension assets to the Lords.

A cross-party attempt to force the government to increase aid to 125,000 victims was defeated in the Commons by a majority of 22, after ministers argued the move was "uncosted". However, the government could find it harder to resist when the bill proceeds to the upper house.