The Winter Supplementary Estimate 2006-07 presented by the Ministry of Defence (MoD) seeks additional funding of £1,599.982 million, of which £1,400 million is to meet the estimated additional costs of operations in Iraq and Afghanistan in the financial year 2006-07.

We commend the MoD for bringing forward the presentation of estimates on the cost of operations in Iraq and Afghanistan to the Spring Supplementary Estimates, but reiterate our recommendation that there should be provision for the cost of commenced operations in the Main Estimates.

The report presents the information provided by the MoD in support of the Winter Supplementary Estimate, including a breakdown of the anticipated costs of operations in Iraq and Afghanistan. We point out that the actual cost is likely to exceed the amount requested in the Winter Supplementary Estimate.

The report also considers the outturn information on the actual costs of operations in 2005-06, as presented in the MoD's Annual Report and Accounts. We highlight the variation between the actual costs and the estimates and call for the Annual Report and Accounts to explain any significant variation in future. We acknowledge that publishing estimates of the costs of operations at the beginning of the financial year would increase the scope for error, and that the MoD might need to seek additional funds by Supplementary Estimate.

We draw attention to retention problems in the Royal Marines which have required a supplementary estimate for the Votes A, increasing the permitted maximum of Reservists.

We recommend that the House of Commons approves the Winter Supplementary Estimate.