Iraq bill hits £5bn as MoD says troops will stay after poll

The cost of the Iraq war and other military action has risen by £520m to a total of £5bn - equivalent to 1.5p on the standard rate of income tax.

The cost of the Iraq war and other military action has risen by £520m to a total of £5bn - equivalent to 1.5p on the standard rate of income tax.

The soaring cost of Britain's emergency military operations abroad was disclosed last night by Chancellor Gordon Brown, who is expected to have to raise borrowing substantially in the pre-Budget report today to cover rising public expenditure.

The Chancellor said he was setting aside an extra £520m in the special reserve to pay for the additional costs. MPs said last night that the rise would be enough to pay for three general hospitals or 20 schools.

The Ministry of Defence also made clear last night that the bills would continue to rise next year, following the decision by the coalition that British troops will need to be deployed beyond the Iraq elections on 30 January.

The rising bill was condemned as "a waste of taxpayers' money" by Vincent Cable, the Treasury spokesman for the Liberal Democrats. "In the first Gulf War, we got 80 per cent of the British costs defrayed by the EU, Japan and the Arab countries because it was sanctioned by the UN.

"We had to pay a total £500m of the cost ourselves. This time, because this is unilateral rather than multilateral, we have paid seven times more than the successful action in the Gulf."

He said the Chancellor was deliberately confusing the spending on Iraq with the ongoing cost of the military operations in Afghanistan and elsewhere to avoid the exact cost of the war on Iraq and its aftermath becoming known. However, Mr Cable said that he believed the Iraq operation was costing about £125m a month. He estimated that, by the end of next year, the total cost of the Iraq war and the occupation will have cost £5bn, excluding the cost of Afghanistan and other operations.

Mr Brown told MPs: "The budget for the Ministry of Defence and our armed forces is rising from £29.7bn this year to £33.4bn by 2007-08. I can confirm that, to date, we have provided £4.4bn to meet the extra costs of the military conflicts in Afghanistan, Iraq and meeting our international obligations."

The chief of the general staff, Sir Mike Walker, told the The Independent recently that British troops would have to stay in Iraq indefinitely, depending on the security threat to the Iraqi authorities.

Adam Ingram, the Defence minister, yesterday confirmed that the MoD had decided that the 2nd Battalion, the Princess of Wales' Royal Regiment should replace 40 Commando when the latter's six-month deployment in Iraq comes to an end in January.

There has been speculation that an extra 1,000 British troops could be sent to Iraq in the new year if the violence worsens in the run-up to elections. This week, Tony Blair said there were no plans to send more troops, but Mr Ingram gave a clear hint that more troops may have to be sent. "If we judge that further changes to the UK military contribution in Iraq would be appropriate to support this process, we will inform MPs at the earliest opportunity," he said.