The Spring Supplementary Estimate presented by the Ministry of Defence (MoD) requests additional provision of £2,192 million, of which £1,410.5 million is to meet the estimated additional costs of operations in Iraq and Afghanistan in Financial Year 2007-08.

The cost of operations in Iraq has risen significantly despite the drawdown of forces there: in particular the estimate of the cost of capital additions there has almost doubled against its forecast just three months ago. The indirect resource costs attributable to operations in both Iraq and Afghanistan have also risen five-fold against last year's outturn, far beyond the scale of other costs. The MoD needs to make clearer the reasons for these considerable increases.

The MoD usually gives its first forecast for the cost of operations in any given Financial Year at the time of the Winter Supplementary Estimates: this is then updated at the time of the Spring Supplementary Estimates when any more additional funding is requested from Parliament. We are pleased that in future the MoD will present a forecast of a large component of the cost of operations in advance in the form of a forecast of the cost of Urgent Operational Requirements (UORs) in its Main Estimate.

The MoD usually presents its first forecast of the cost of its Balkan operations in the Spring Supplementary Estimate each year, just shortly before the end of the Financial Year to which they apply. We are grateful to the MoD for agreeing to include a forecast of the cost of Balkan operations in its Main Estimate from the next Financial Year onwards.

We still feel some concern that the MoD's forecasts are insufficiently robust. While we accept the difficulty of predicting costs when operations are ongoing, the difference between the forecasts delivered at the time of the Winter and Spring Supplementary Estimates appears unreasonably large. Where in future Supplementary Estimates bring significant increases in the cost of operations, the Estimates memorandum should make clear to what extent the increase is the result of previous under-estimation and where it is a genuine cost increase.

We recommend that the House of Commons approves the Spring Supplementary Estimate, given the importance of ensuring that our Forces in Iraq and Afghanistan are properly resourced.