The cost of international military operations by the UK (2001-2013)

This note provides a summary of the estimated and actual costs of international military operations conducted by the UK in Afghanistan, Iraq and Libya. The paper includes information on Urgent Operational Requirements (UOR) as well as comparisons with US expenditure.

Comprehensive analysis of policy developments concerning Afghanistan, Iraq and Libya can be found on the associated Topic pages.

Summary

The MoD identifies the costs of operations in terms of the net additional costs it has incurred. That is those costs which the MoD would have incurred had the operation not been undertaken, for example expenditure on wages and salaries or on conducting training exercises, are deducted from the total costs of the operation.

The outturn cost of operations in Iraq and Afghanistan totalled £21.6bn between 2002/03 and 2010/11, with a further £7.7m estimated to be spent in Afghanistan over the subsequent two years. The Government has estimated the total additional costs of the operation in Libya to be £320m.

Background to MOD estimates

Prior to the publication of the MoD Annual Report and Accounts 2005/06 there was a distinct lack of information published regarding the costs of operations in Iraq and Afghanistan.

The House of Commons Defence Committee reported that the ‘MoD’s Annual report and Accounts 2004/05 gives the overall outturn for each operation, but disappointingly little detail’. The Committee recommended that future MoD Annual Report and Accounts should contain significantly more detailed information on the cost of operations.

In its response to the Committee’s report the Government accepted the recommendation and agreed to provide more detailed information on the costs of operations.

In the 2009/10 Main Estimate the MoD, for the first time, provided a breakdown of the operational costs. In its report on the 2009/10 Main Estimates the Committee welcomed the increasing amounts of information being provided at an earlier stage than before. From 2011/12 the Winter and Spring Supplementary Estimates were replaced by just one Supplementary Estimate.

Financing military operations

In Pre-Budget Report 2002 the Chancellor announced he had set aside a provision of £1bn to be drawn on if necessary ‘to meet our international defence responsibilities’. By the time of Budget 2003 the military campaign in Iraq had begun and a further £2bn was added to the Special Reserve.

In subsequent Pre-Budget and Budget reports this Special Reserve was increased by a further £4.84bn.

In total, up to and including the announcement made in the Pre-Budget Report 2007, £7.8bn had been allocated to the Special Reserve. No further specific announcements have been made regarding Special Reserve allocations.

Afghanistan

Expenditure on operations in Afghanistan totalled £3,774m in 2010/11, marginally lower than it had been in 2009/10 and 16% below the forecast in the MoD’s Spring Supplementary Estimate.

In most years outturn expenditure has been below the final estimate. Differences between estimates and the final outturn figures are due to the changing operational requirements and associated troop numbers.

The costs of operations are significantly driven by the tempo of operational activity, impacting on equipment support costs, attrition, fuel and ammunition consumption to name major elements. Exchange rates, fuel prices and actual costs incurred with contractors can all also vary during the financial year.

Iraq

The conclusion of the UK/Iraq Training and Maritime Support Agreement on 22 May 2011 marked the end of Operation TELIC – the name for UK operations in Iraq.27

Between 2002/03 and 2010/11 the outturn additional costs of operations Iraq totalled £8.257bn.

Outturn expenditure on operations in Iraq was £95m in 2010/11, a 72% decrease on the previous year. The outturn cost was 38% lower than the forecast set out in the MoD’s Spring Supplementary Estimate.

Libya

The mission in Libya concluded on 31 October and on 8 December the Ministry of Defence announced that its estimate of the total net additional cost of Operation Ellamy was £212m. This constituted £145m of operating costs and a £67m on the cost of replenishing munitions.

According to the Ministry of Defence Annual Report and Accounts the net additional cost of military operations in Libya in 2010/11 was £21.6M. This expenditure covers the period up to 31 March 2011.

The most recent estimates suggest that final expenditure will be higher than the £212m announced by the Ministry of Defence. It is estimated that expenditure in 2011/12 will be £247m with a further £50m spent in 2012/13 replacing consumed munitions.31

This would take the total additional costs of operations in Libya to approximately £320m.

Urgent Operational Requirements

An Urgent Operation Requirement (UOR) is ‘an equipment capability which is required urgently for military operations, and which the MOD endeavours to deliver as quickly as possible.

The total cost of UORs approved in each financial year between 2002/03 and 2010/11 to support operations in Iraq and Afghanistan is £6,780m.

On 22 November 2007, Baroness Taylor announced a change in the funding of UORs. Despite the fact that the arrangements were designed to be cost-neutral to defence over the three year CSR period, the Defence Committee expressed concerns that it is a complicated arrangement and has sought greater clarity on how this will affect future MoD budgets.