War in the Balkans: Costs: Conflict costs pounds 2m a day, but tax will not rise

THE LIKELY cost of the conflict in Kosovo will not pose a threat to the UK's public finances, the Government said yesterday, as it revealed that it had spent at least pounds 77m and up to pounds 100m on the war to date.

Alan Milburn, Chief Secretary to the Treasury, told MPs that the military operation had cost pounds 37m, excluding munitions, while pounds 40m had been earmarked for humanitarian aid.

Although the Ministry of Defence refused to release figures on the latest cost of the bombs dropped, it is estimated that munitions have cost around pounds 25m, taking the total spending to around pounds 100m for the seven-week campaign. Each bomb cost an average of pounds 37,000, according to MoD figures. The figures mean that the war is costing the taxpayer roughly pounds 2m a day.

Issuing the detailed figures of the conflict for the first time, Mr Milburn stressed there was no danger that the UK's commitment to the Nato action would jeopardise public spending plans. Funds would be found from the reserves of individual Whitehall departments and the Treasury's pounds 1.5bn Contingency Fund, he told the Commons Treasury Select Committee.

"At this stage, it is virtually impossible to speculate on what the eventual cost might be. We can't predict what [the Serbian President] Milosevic's next move might be and nor can we predict how we need to react to it," he said. "There is one constant - we are determined to see through what we have started. Neither you nor I know how events are going to develop but, on any likely scenario, there is no threat to the public finances."

Mr Milburn conceded that the cost of reconstruction of Kosovo and Serbia after the conflict was likely to be "substantial", but he made clear that the UK would "play its role". Mr Milburn failed to give any figure for the reconstruction bill that the UK may face, nor the cost of a long-term peace- keeping force in the area. The cost of housing refugees would be met by the Home Office, he said.

The cracks in the bipartisan agreement at Westminster on the Kosovo conflict widened last night with angry clashes between Downing Street and Michael Howard, the Conservative spokesman on foreign affairs, over the bombing of the Chinese embassy in Belgrade. The Prime Minister's official spokesman accused Mr Howard of undermining the morale of the British pilots flying bombing missions in Kosovo and Serbia. The Tories said that the claims were "outrageous" and made clear that Mr Howard had been authorised by William Hague, the Tory leader, to criticise Nato's conduct of the campaign.