LORD PENROSE, the judge appointed by the Treasury to identify who is to blame for the Equitable Life catastrophe, has named the Government in his yet-to-be-published hitlist, The Times learnt yesterday.

It has emerged that government offices responsible for regulating the troubled insurer — including the Treasury and the Department of Trade and Industry (DTI) — are criticised by the official inquiry into its collapse, raising new hope for Equitable Life policyholders of state compensation. Hugh Burns, secretary to the Penrose inquiry, told The Times that all those criticised by the report have now been contacted by the inquiry team.

The Treasury and the DTI, which were responsible for regulating insurers in the 1990s, both confirmed yesterday that they have been sent Lord Penrose’s criticisms ahead of the publication of his report. However, it is understood that they have not been shown the full report, which the Treasury still has the right to veto.

The Treasury is understood to have been contacted by the Penrose inquiry team ten days ago, and to have been given time to reply to criticisms about its officials’ regulatory supervision of Equitable Life.

The Penrose inquiry was commissioned by the Treasury in 2001 to investigate the demise of Equitable Life. The Treasury is due to receive a copy of the full report as soon as its own officials have replied to the specific criticisms made against them.

Mr Burns said: “I hope it won’t be very long now, but we can’t say more than that.”

He added that the time allowed to each body that has been criticised in the report — under the process known as “Maxwellisation” — depends on the severity of Lord Penrose’s criticism of them. The process earned its nickname amid the interminable DTI inquiry into the Robert Maxwell pension fraud which allowed parties criticised by the report to offer a defence.

Equitable Life’s current board has vowed to sue the Government for compensation, if the Penrose report highlights failures in government regulation of the society. A spokeswoman for the insurer said: “We are keenly awaiting this report.”

Equitable Life policyholder action groups yesterday said that the Government should be forced to compensate policyholders. The insurer lost £1.5 billion after a House of Lords ruling in 2000 forced it to honour pledges made to policyholders with guarantees on their policies.

However, policyholders remain concerned that the Treasury will veto publication of all or part of the report. Liz Kwantes, of the Equitable Life Members’ Help Group, said: “If this report does not appear in full, a lot of people will be extremely angry and very suspicious.”

Until the end of 1997, Equitable Life was regulated by the DTI, which then handed reponsibility to the Treasury.