Pensions plan sparks clash between Blair and Brown

Tony Blair has clashed with Gordon Brown over proposals to set up a review aimed at finding an all-party consensus on how to tackle the growing crisis over pensions.

In a fresh sign of tension between the Prime Minister and the Chancellor, Mr Brown has resisted Mr Blair's call for a new body, perhaps a Royal Commission, to conduct a long-term investigation into pensions provision. The Prime Minister wants a fresh look at the issue in the hope of forging an agreement that would not be torn up by a future government. One aide said: "Pensions is one of those areas where we need long-term solutions for future generations, so it is best to find an all-party approach."

But Mr Brown has argued that setting up another review would be seen as a fudge and provoke accusations that Labour was using delaying tactics because it had no answers to the problems. A carefully crafted compromise is expected to be announced in the Government's long-awaited Green Paper on pensions to be published on 17 December.

Andrew Smith, the Work and Pensions Secretary – a close ally of Mr Brown – is likely to rule out setting up a commission at this stage, but the Government may consider an independent review to look at one or more specific areas of pensions policy if consultations revealed a demand for it.

The Green Paper will not reopen the question of state provision, focusing instead on private and occupational pensions. Mr Smith has hinted the document will rule out options such as making it compulsory for employers to contribute to workers' pensions.