Chancellor says high cost of compensation cannot be justified because most of women affected had known pension changes were coming

Improving public services is a higher priority than spending £10bn compensating Waspi women, the chancellor, Rachel Reeves, has said, as MPs and campaigners criticised the decision to reject the watchdog’s recommendation for a flat-rate compensation scheme.

Her comments came after campaigners accused Labour of hypocrisy for having promised to compensate women hit by the rising state pension age. The parliamentary ombudsman had recommended paying out £1,000 to £2,950 to each of the more than 3 million women affected.