New estimate suggests No 10 was wrong to panic over cost of farm virus clean-up

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Controversy over Tony Blair's decision to suspend the foot-and-mouth clean-up was reignited yesterday when it emerged that it would cost less than a quarter of the sum predicted by the Government.

Instead of the £800m figure quoted last month as a reason for halting the programme in England, the cost of disinfection and other procedures is now not expected to surpass £200m.

The figure came as the Government restarted the clean-up programme yesterday and unveiled restrictions on compensation payments, including a cash ceiling per farm.

The cost to the taxpayer of disinfecting farms affected by the disease has been drastically scaled down following a detailed assessment by the Department of the Environment, Food and Rural Affairs.

Mr Blair intervened last month following suggestions that the Government was being overcharged by contractors who were presenting bills averaging £100,000 per farm.

But Defra insiders claim that the high bills that initially caused alarm in Downing Street were unrepresentative and a detailed study has found that the figure will be closer to the £30,000 charged in Scotland.

Defra, formerly Maff, has always believed that the £100,000 figure was too high but Mr Blair's office insisted on a halt to the clean-up over fears that unscrupulous contractors were exploiting the scheme.

"Number 10 saw a couple of high bills and panicked," said an insider. "The average figure was never going to be that high but it was a good excuse to tighten up the whole system."

The Government is determined to look at claims more closely and yesterday unveiled new compensation guidelines.

The clean-up of farms affected by foot-and-mouth was resumed by the Government last night but with strict rules to cut costs and prevent farmers cashing in. The crackdown on excessive charging by farmers and contractors – who were paid around £15 an hour, with no limits, to disinfect farms – will include new contracts with a cap on the amounts that they can bill the taxpayer for.

Surveyors hired by Defra will set the market price for cleaning-up farms under the rules. Accountants have cancelled several contracts with farmers where costs have spiralled. Others that cost up to £100,000 are being examined.

If farmers do not adhere to the clean-up rules, the Government may tell them to pay for the clean-up themselves.