For the first time, the Chancellor has given his own estimate of the expected cost of the operations in Iraq and Afghanistan for the next financial year, putting the figure at £2 billion.

Only this week the Commons Defence Committee revealed that the cost of the two campaigns in 2007/2008 had nearly doubled to £3.2 billion. The MPs also complained that the Treasury failed to provide early estimates of future costs.

In his Budget Statement, Alistair Darling answered the MPs' complaint by giving his estimate of the cost for 2008/2009 as £2 billion. This is the money that will now be set aside from the Treasury's contingency reserves for the operations in Iraq and Afghanistan.

The figure is considerably lower than for the present financial year but the Chancellor's estimate is based on the premise that British troop numbers in Iraq will have been cut back from 4,100 to 2,500 by the end of this year. There are also no plans to increase troop levels in Afghanistan by a significant amount, although it is likely that the present strength of 7,800 could increase to more than 8,000 by the autumn.

Background

• Darling's first Budget: the main points

• The Chancellor's speech in full

• Darlings first Budget: the reaction

• Chancellor hits the home budget as his debts soar

• Need to know: Budget 2008

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The £2 billion bill for 2008/2009 may well have to rise by the time the Ministry of Defence assesses the funds required for the two operations. The Commons Defence Committee reported that the MoD had considerably underestimated the costs for the present financial year. The original estimate had been £955 million for Iraq and £964 million for Afghanistan. The real figures turned out to be more than £1.4 billion for each of the campaigns.

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