GORDON Brown, the Chancellor, has been warned that the costs of the mass slaughter of cattle to eradicate BSE are spiralling out of control.
According to the Treasury's latest estimates, the total costs could amount to £4.2 billion - nearly double the original estimates. The figures were announced on the day that the McDonald's burger chain said it was lifting its 15-month ban on British beef.
Treasury insiders claim there is mounting evidence that farmers are exploiting the compensation scheme. Some farmers are alleged to be fattening up cows deliberately to get higher payments, which are based on the weight of the slaughtered animal.
As a result, Jack Cunningham, the Minister of Agriculture, is seeking approval for a reduction in the level of compensation payments. It could result in a cut of about £100 in the average payment of £300 per cow killed under the eradication programme.
The Ministry of Agriculture is now budgeting for the costs of the slaughter programme to rise to £2.7 billion over the three years to the beginning of 2000. This is £700 million more than previously estimated.
However, before BSE is effectively eradicated from the national herd the cost could reach £4.2 billion. Urgent discussions are now under way between the Treasury and the ministry on ways of limiting the cost and preventing farmers boosting their payments through what officials described as a growing number of "scams".
The disclosure of another "black hole" in the Government's finances is likely to fuel speculation of tax increases in Labour's first Budget on Wednesday.