He was refused a peerage in the Queen's Birthday Honours List on the advice of the all-party scrutiny committee. Mr MacShane said: "Isn't one of the major problems in the whole tax revenue question those gentlemen who so arrange their affairs to avoid paying the taxes that is due in this country? Would you agree to commission the Inland Revenue to [investigate] Michael Ashcroft's tax arrangements?"But, replying, Alan Milburn, the Treasury's Chief Secretary, said it would be inappropriate for ministers to get drawn into the tax affairs of any individual.. DEFENCE SECRETARY George Robertson yesterday claimed a victory over the Treasury by forcing the Chancellor Gordon Brown to take the cost of the Kosovo war out of his reserves, avoiding it hitting the defence budget. Mr Robertson told the Commons select committee on defence the Kosovo conflict had already cost pounds 43m and it was likely to go much higher. There were likely to be "very substantial" costs involved in securing the peace in Kosovo with a continuing military presence. The cost of replacing Britain's arsenal of Cruise missiles fired at Serb targets was not revealed because, the Defence Secretary said, there was a continuing threat from the Serb leader Slobodan Milosovic.Alan Milburn, the Chief Secretary to the Treasury, has been in negotiations with Mr Robertson about the war and earlier announced that he would accept pounds 10m on the Treasury budget, pending further talks in Cabinet.Mr Robertson has now won the battle, although the Treasury has a reputation of taking back with one hand what it gives with the other. The Defence Secretary made it clear there would be detailed arguments over the replacement cost of some of the weapons fired in Kosovo and Serbia."I can tell you that the Treasury have agreed that they will cover the net additional costs in this operation. That, I believe, is the right view that the committee would approve of," he said.

"The Treasury will obviously look searchingly at the figures we put up."The Chief of Defence Staff, Sir Charles Guthrie, told the committee the first British peacekeeping troops in Kosovo could start returning home in the autumn. General Guthrie later admitted Nato did not know how many Serb tanks had been hit by its warplanes, but rejected a report yesterday that the air campaign had failed by allegedly knocking out just 13 tanks. He believed the bombing was the "principal cause" of President Slobodan Milosevic's capitulation "Mathematics isn't everything I have never been fixed on figures. It isn't necessarily a case of killing or knocking out tanks," he said.The Tories stepped up their demands for a public inquiry into Nato's conduct during the war.

Shadow Defence Secretary Iain Duncan Smith said: "Only a public inquiry can help us learn the lessons about the war and to help avoid making similar mistakes in the future.". THE LIBERAL DEMOCRAT leadership campaign became more crowded yesterday when Don Foster became the sixth challenger to launch his official bid to take over from Paddy Ashdown. Mr Foster, the party's education spokesman, describes himself as the only candidate in favour of closer co-operation with Labour but stressed that his party should not seek to replace Labour on the left. Using the campaign slogan "Ambitious for Power", Mr Foster made it clear that those who "play politics without seeking power lack self-belief".His launch came as Liberal Democrat MPs spoke of a "general sense of anti-climax" after a hustings on Wednesday night. Almost all of the party's 46 MPs attended the hustings to hear addresses from the six candidates - Mr Foster, the bookies' favourite Charles Kennedy, Malcolm Bruce, David Rendel, Simon Hughes and Jackie Ballard. The official closure for candidatures is on Monday but, given their relatively high-profile launches, it does not seem likely that any of them will withdraw their bid.One senior MP, still undecided as to whom to support, said the candidates had not done themselves "any justice".The rival camps were hoping to sign up the 14 MPs who have not so far declared their allegiance. The main attention has focused on the "group of four" -Menzies Campbell, Paul Tyler, Nick Harvey and Archy Kirkwood - who are expected to back the same candidate.Although the leader will be elected by a proportional-representation vote by the party's 90,000 members, endorsements from leading MPs could sway the opinion of local activists.Mr Kennedy, the rural affairs spokesman, has so far been backed by 15 MPs, Mr Bruce, the treasury spokesman, by three MPs, while Mr Hughes, Mr Foster, Mr Rendel and Ms Ballard have the support of just two MPs each..

THE EXPLOITS of the corrupt tax inspector Michael Allcock may have cost the taxpayer millions of pounds, the Government admitted yesterday. In its first formal report on the affair, the Treasury has concluded that it is unlikely that the "full extent" of Allcock's activities could ever be established. After seven years of investigation, civil servants have effectively concurred with MPs' claims that the 49-year-old inspector could have failed to register millions in tax due. Allcock, the head of an elite team to tackle City fraudsters, was sentenced to five years in prison in 1997 after an Old Bailey jury found him guilty of six counts of corruption.The trial heard that he had accepted pounds 150,000, trips to Monte Carlo, a Caribbean cruise, Concorde tickets and the services of a prostitute in bribes from the wealthy Arab businessmen he was supposed to investigate.Both the National Audit Office (NAO) and the Commons Public Accounts Committee issued scathing reports last year attacking the Inland Revenue's failure to keep proper checks on its staff and to spot the fraud.The Treasury yesterday responded to those reports with a range of measures. The Inland Revenue is to set up a new confidential complaints system that will allow taxpayers to report worries about their taxmen without fear of being victimised.Staff will also be subjected to tighter financial vetting and make annual declarations that they have complied with a tough code of conduct. Periodic staff surveys will be conducted and managers are to be trained in spotting tell-tale "warning signals" in an employee's behaviour. Any member of staff exhibiting an extravagant lifestyle, financial problems, unusual gifts, regular excuses for poor performance and rule-breaking will be monitored closely by their bosses.To the amazement of some MPs, Allcock received his full salary of pounds 58,000 when he was suspended between 1992 and 1994. For a further two years of suspension, the Inland Revenue gave him pounds 35,000 in hardship payments.