The bomb, five weeks after the Warrington blast, also reopened a wider debate about the effectiveness of the police and the Security Service, which now has responsibility for intelligence gathering.
David Mellor, a former Home Office minister, questioned whether the police were adequately funded for the task. He said on BBC Radio: 'The terrorists have raised their game . . . we must raise our game too.'
The cost of the one-ton bomb, made from fertiliser and inside a tipper truck, which left one man dead and more than 40 injured, was put at pounds 300m to pounds 400m yesterday by the Association of British Insurers, which dismissed an earlier estimate of pounds 1bn.
But it will exhaust money put aside by insurance companies to pay for terrorist attacks, leaving the Government to meet the full cost of any more mainland IRA bombings this year.
City of London police disclosed yesterday that it was policy to allow lorries used by workmen to park on double yellow lines at the weekend so maintainence work could be conducted. The IRA may have spotted and exploited this loophole.
A force spokesman said last night: 'It is correct that an officer's attention would not have been normally attracted by a truck with its hazard lights flashing on a yellow line. However, this policy will be examined in the light of Saturday's attack.'
Other expected measures are increased use of security cameras at strategic sites, more foot patrols and promotion of public awareness. The 798- strong force has already been increased by 50 officers following the Baltic Exchange bomb last year and shifted resources to foot patrols.
The force will almost certainly increase the frequency of the random armed road checks it has been staging since December; the last check was on Friday night in the Bishopsgate area and it is possible the IRA may have chosen this target for the additional embarrassment of the police.
A major question to be covered by the review will be whether the evacuation was successful, given that the police had located the bomb nearly an hour before it exploded. It is police policy to keep people inside buildings rather than leave them in the open and exposed to flying glass. The force was unable to say whether any attempt had been made to defuse the bomb or how long it had been there before it was spotted.
In a series of interviews unlikely to be welcomed by former Cabinet colleagues, Mr Mellor called for a 'total overhaul' of anti-terrorist policies because police were not getting results; those behind a number of high profile attacks such as the murder of Ian Gow had not been caught.
Paul Wilkinson, Professor of International Relations at St Andrew's University and a leading terrorism expert, welcomed Mr Mellor's intervention: 'I have been saying for a long time that we need a national anti-terrorist organisation; the IRA has become very subtle at switching methods and targets with great ease.'
He said there would have to be an inquiry into whether the City of London police were adequately resourced: 'If they had better resources, would the bomb have been spotted and defused earlier and all this damage avoided?'
Fourteen hours after the bomb, IRA terrorists also hijacked two mini- cabs in north London and ordered the drivers to go to Downing Street and Scotland Yard; both drivers abandoned their vehicles and the devices exploded without injury.
Security sources suggested that by switching tactics within hours of a major bomb, the IRA was showing its determination to introduce Ulster- style conditions into Britain, with a variety of methods randomly deployed. On Friday, two incendiary devices were found at an oil depot in Tyneside.
John Major returned earlier than expected to Downing Street from his Huntingdon constitutency to review measures against terrorism although it is unlikely any formal Commons statement will be made.
In a statement issued in Dublin, the IRA claimed responsibility for the Bishopsgate and Tyneside attacks. It contained the usual IRA claim that 'precise and adequate warnings' were given and said responsibility for the injuries caused rested with the British authorities. It said the police were aware of the coded warnings 70 minutes before the explosion and had 'positively located the bomb a full 20 minutes before it detonated.' It warned of further attacks.
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