John Reid looks set to be dealt a further blow today as the Government faces defeat in the House of Lords over provisions of its long-awaited Bill on corporate manslaughter.

A cross-party coalition led by Lord Ramsbotham, a former Chief Inspector of Prisons, is seeking to extend its scope to prisons and police cells to enable prosecutions over deaths in custody.

But Mr Reid is refusing to budge and peers have been threatened privately that he is ready to scrap the legislation rather than give way.

The threat has soured previous debates on the issue but failed to deter the alliance of peers who cite a string of deaths in custody for which no action was taken.

Lord Ramsbotham, told The Times: “For John Reid to threaten to pull the Bill suggests he wants to go on hiding this sort of thing. This is not a party political issue. It is a moral issue, frankly.”

The stand-off comes to a head tonight as the Corporate Manslaughter and Corporate Homicide Bill returns for its report stage to the Lords. It has cleared the Commons where Labour backbenchers failed to have the prison service included within its scope.

In the Lords, where no party has a majority, Conservative, Liberal Democrat, crossbenchers and some Labour peers have demanded that the service be held liable for deaths in custody. They also want it to apply to deaths in police cells, immigration centres and local authority secure accommodation.

Trade unions have sought a Bill making large companies liable for manslaughter charges after the capsizing of the ferry Herald of Free Enterprise and a series of fatal rail crashes.

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