The scheme, which follows intensive talks between Mr Heseltine's department and the insurance industry, is more modest than the one already operating in Northern Ireland. But if it had been in existence at the time of the Baltic Exchange bomb, it would have paid out pounds 500m.
News of the scheme came as an IRA bomb hoax yesterday forced the evacuation of part of Oxford Street, Regent Street and surrounding roads in London's West End, on what should have been the busiest shopping day of the year. The alert lasted all morning, leaving the area deserted and silent. From behind police lines all there was to see were a few police vehicles nosing out from side roads.
By 11am, at Marks & Spencer, in Oxford Street, just outside the cordoned area, a manager told his staff the day was lost. Those undeterred by the closure of Tube stations and lengthy walks fell victim to drizzle and cold.
The Oxford Street Association has played down the effects of the two IRA bombs on Wednesday. But yesterday there was no doubt it was a miserable end to a miserable trading year. 'It has been quiet since Wednesday and bad all year, but today is a disaster,' said Hossam Elliessy, owner of The Base clothes shop in Carnaby Street, as he pulled down his shutters for another evacuation.
Carmen Farruija, an employee in Spreads coffee shop, said: 'We are just trying to make a living. I wish the terrorists would give up.'