The government is planning to hand UK business £20 million to compensate for its email interception plans.

Tony Blair has told the Home Office to cough up the cash after fears that companies would flee abroad to avoid the Regulation of Investigatory Powers (RIP) Bill impacting their business. There is also the prospect of the House of Lords defeating the Bill.

A recent report by the London School of Economics put the likely cost of RIP to business at £650 million over five years.

The Home Office's own report, compiled by The Smith Group earlier this year, came up with the smaller figure of £20 million for installing and running the interception equipment and over four years.

A Home Office representative dubbed the £20 million figure "speculation", refusing to deny or confirm whether the PM was planning to sub businesses over the implementation of RIP.

She reeled off the following statement: "We are examining with the industry what would be reasonable intercept capabilities for certain ISPs, and what portion of the industry should maintain such a capability and who should meet the associated costs."

RIP goes to the report stage in the Lords on Wednesday. ®

See alsoRIP Bill: full coverage