The UK government is a little closer to a full-blown political nightmare over unpaid pensions today, as the Court of Appeal backed a £2.2bn demand by the country's Pensions Regulator against the bankrupt firms Lehman Brothers and Nortel Networks.

Lawyers say the decision, which follows an earlier judgement by the High Court also in the Regulator's favour, backs an interpretation of the law that places an underfunded company pension scheme ahead of all other financial creditors. If a company goes bust, pensioners get paid before the banks.