THE Government agreed last night to pay compensation to cash-strapped police chiefs for the enormous costs of handling the Selby train crash inquiry.

About £825,000 is to be paid to North Yorkshire Police after the force launched the biggest investigation in its history in the wake of the disaster, which killed ten people last February.

But the announcement was bitter-sweet for taxpayers, who a day earlier had been told there would be a 41.5 per cent rise in this year's police precept - the part of council tax bills which funds law and order.

Police authority members had been pleading for the Government to pay up in order to ease a major budget dilemma, but the announcement was not made in time to avert the increase.

Local Government Minister Nick Raynsford ended weeks of speculation by confirming that the force qualified for funding because of the exceptional costs it incurred in safeguarding life and property immediately after the crash.

The funding will be provided under the Bellwin scheme, the Government's national contingency fund set up to deal with unforeseen disasters, and represents 85 per cent of the total £971,000 spent on the inquiry by North Yorkshire Police.

In a written reply to a parliamentary question from Selby MP John Grogan, Mr Raynsford said: "I am satisfied that financial assistance under the Bellwin scheme is justified in the case of North Yorkshire Police Authority, given the exceptional nature of the costs incurred following the rail crash."

Taxpayers had previously been warned they would have to meet the shortfall created by an escalating pension payments crisis and the Government's failure to reimburse the costs of policing the Selby tragedy.

Auditors have told the authority that it should have at least £1.7m in reserve for major incidents, which is where the Bellwin cash is expected to go.

Authority member and county councillor Carl Les welcomed the news, but said: "What a pity this could not have been announced a day earlier when it would have helped with our budget deliberations.

"It is extremely helpful, but the police authority still has some serious budget issues to face in the coming year.