§ Lord Bach
The Ministry of Defence identifies the costs of operations in terms of the net additional costs it has incurred. The costs, which the department would have incurred had the operation not been undertaken—expenditure on wages and salaries or on conducting training exercises for example—are deducted from the total costs of the operation.
Calculating all the costs of military action will take some time to determine since it will include the cost of ammunition, bombs and guided weapons consumed in excess of peacetime levels and equipment destroyed and damaged. Excluding those costs, the latest estimate is that the net additional cost of operations in Iraq for 2002–03 is around £700 million. This is less than the £1 billion set aside at Spring Supplementary Estimates 2002–03.
Items in the £700 million estimate include costs for the procurement of equipment or modifications under the heading of urgent operational requirements, increased maintenance and stock consumption, civil sea and air charter and provision of infrastructure in the theatre of operations. It is most likely that a comprehensive and robust figure for 2002–03 will be available only when the National Audit Office has approved the departmental resource accounts.
It is too early to estimate the costs likely to arise in 2003–04. Once these are known, additional funding will be sought in the normal way through Supplementary Estimates.