Libya conflict may cost UK £1.75bn

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Research suggests defence bill may be seven times government estimate, prompting calls for full spending breakdown

The true cost of the UK's involvement in the Libya conflict could be as high as £1.75bn – almost seven times as much as government estimates, according to a new study.

Research by a respected defence analyst suggests that the government has given a misleading picture of the costs of supporting the military operation, now in its seventh month, leading to demands for a proper spending breakdown.

Although Muammar Gaddafi's regime has crumbled in recent weeks, RAF airstrikes against forces remaining loyal to him have continued at an exceptionally high rate, depleting stockpiles of expensive precision weapons the Ministry of Defence will want to replace. That will add to the overall bill, which is still rising and which the Treasury has promised to meet from its special reserves.

Concern over funding for the operation has been mounting as government departments, including the MoD, have to cope with deep spending cuts because of the fragility of the economy.

Reacting to the latest analysis, Labour renewed its call for ministers to provide more details of military costs and promise there will be no knock-on effect for the MoD budget, which is under huge strain. "It is vital we have transparency on this," said Jim Murphy, the shadow defence secretary.

The Treasury has still not paid the MoD for the "wear and tear" costs of equipment used in Iraq, raising further concerns within the military about the long-term consequences of the deployment to Libya.

This month the MoD revealed that UK combat aircraft had flown more than 1,600 missions over Libya – around one fifth of all Nato strike sorties – and destroyed or damaged about 900 targets. Those figures will have risen significantly in the last fortnight.

The UK has also deployed 32 aircraft, Apache attack helicopters, warships, a helicopter carrier, a submarine and anti-mine vessels.

Using data provided in answers to parliamentary questions, and figures provided by the RAF since the campaign started, the defence expert Francis Tusa, editor of Defence Analysis, was able to make two sets of detailed calculations about the costs of the Libya operation in the first six months.

Using one method, he estimated the cumulative cost of the operation to the end of August at between £1.38bn and £1.58bn.

Using a second method, the costs were potentially even higher – between £850m and £1.75bn.

In June, the government said the overall costs of the Libya campaign were in the region of £260m. An earlier estimate by the chancellor, George Osborne, put the operation in the "tens of millions."

Tusa did not include the cost of the most recent sorties, which have included several RAF Tornados flying on numerous occasions from the UK to Libya, or the "start-up" costs that were incurred when, in the early weeks of the mission, the MoD hired fleets of Eddie Stobart trucks and trailers to take equipment from here to the military base in Gioia del Colle, Italy.

"Where there has been any doubt, I have underestimated rather than overestimated in my calculations," Tusa said. "With the number of missions the RAF has flown in the last fortnight, I am sure the cost of the campaign has gone up considerably." Tusa's detailed calculations and analysis by him, are available on the Guardian's datablog.

Murphy said the government needed to be open about the costs, and challenged the way ministers had appeared to deliberately downplay the money spent so far.

"Labour supported the conflict in Libya. £1bn is much higher than the initial estimate and if it is correct we will want to see detailed breakdowns. We will also want to know why Danny Alexander [chief secretary to the Treasury] was so wrong when he said the conflict would cost 'hundreds of millions'."

He added: "It is vital we have transparency on this, as the British people will want to know that our military strategy balances advanced kit and equipment with cost-effective decisions. Many have questioned whether the decisions made in the rushed defence review left our forces stretched and may have cost the country more in this unforeseen conflict. It is up to ministers to answer that charge.

"At a time when redundancies are being made and cuts to equipment are biting, it is important that the core defence budget is protected as much as is possible. Replenishments of munitions used in Libya, therefore, must come out of the Treasury reserve."

Rear Admiral Chris Parry, a former director of development at the MoD, said the department had to look out for being charged for "hidden costs" that would further erode its budget.

"Despite government assurances, every operation has hidden costs that are never recovered," he said. "Although a substantial proportion of the costs of the Libya operation will come out of the Treasury reserves, this does not take into account the 'wear and tear' on ships, airframes and equipment caused by a higher tempo and intensity of activity.

"These hidden costs include the extra provision required for missed training and exercising, the depletion of munitions and spares stocks, which are not always replaced on the basis of like-for-like, and the extra loading placed on those units not directly involved in the conflict. These usually have to cover for deployed units, or have to give up manpower and equipment to support it."

Parry said that mandarins had, in the past, used "opaque, complex accounting practices" to conceal the true costs of military operations. This meant that "the full impact of a conflict on the armed forces in operational capability terms is obscured in the short term, but over time results in a progressive hollowing-out of effective capability."

When the government said Libya would cost taxpayers £260m, it gave limited information about how it had reached the figure. It said that £120m was needed to cover the cost of day-to-day running, over and above the money already set aside for training and exercises. The other £140m represented the cost of the munitions used so far. Neither the Treasury or the MoD said it had anything further to add at this stage.

Giving evidence to the defence select committee in June, the MoD's chief of defence materiel, Bernard Gray, was asked whether the Treasury had yet paid for the wear and tear costs from the war in Iraq.

When asked if it was true the MoD had received "nothing so far", he replied: "Yes."

• Defence policy
• Libya
• Middle East
• Africa
• Muammar Gaddafi
• Foreign policy
• George Osborne
• Jim Murphy
• Military

Nick Hopkins

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