Cost of bombs could be passed on to customers

MINISTERS are becoming alarmed at the bill for the IRA bombing campaign, raising the threat that more of the cost may have to be passed on to customers by businesses, writes Colin Brown.

'It could come to half a billion pounds. Think how many hospitals that would have bought. We can't just sign an open cheque,' one Cabinet source said.

Ministers are worried the bombing campaign will intensify the already tight squeeze on public expenditure as the Treasury attempts to curb the public sector borrowing requirement, predicted in the Budget to be pounds 50bn this financial year.

Downing Street refused to rule out the possibility that the Government may be forced to seek higher premiums for the reinsurance fund set up to cover terrorist-related claims since January. It is intended that premium income should meet claims, but if they exceed the fund, the Government will meet the bill.

The Government is refusing to disclose the extent of the existing fund, estimated at pounds 200m, on the ground that it would give the terrorists a target.

Some Cabinet ministers fear the bombers may strike at other high profile targets. They believe the Government must set a limit on the extent of its commitment, in spite of the pressure to show that it is 'business as usual' in the City.

That may happen when legislation to give statutory backing to the fund is introduced.

John Major yesterday discussed security in the City with Sir Francis McWilliams, the Lord Mayor of London, the Metropolitan Police, the City of London Police, and Kenneth Clarke, the Home Secretary.

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