The sharply rising costs of the war in Afghanistan were laid bare yesterday when the Ministry of Defence said that it would need more than £2.3 billion from Treasury reserves to pay for the campaign in Helmand province this year.

The estimated cost for Iraq in the same period will be nearly £1.4 billion, despite the planned reduction of British troops in the south from the present 4,100 to a few hundred from May.

The latest combined estimated bill of £3.7 billion for Iraq and Afghanistan this year means that the two operations will have cost the taxpayer £13.2 billion over the past six years.

Most of the funds have come from Treasury contingency reserves, although the MoD has had to bear some of the financial burden from its own budget to share the costs of new armoured vehicles sent to Iraq and Afghanistan.

If troop cuts go ahead in Iraq as planned, the cost of Operation Telic — codename for the military campaign — should come down markedly next year. The reduced military presence, which could even be cut to zero by the end of 2009, would be concerned solely with training the Iraqi Army’s 14th Division based in Basra. This would make it possible to transfer much-needed helicopters and other equipment to Afghanistan.

The cost of Operation Herrick, the campaign in Helmand, however, looks set to rise and rise. The bill in 2005-06 was £199 million. This increased to £738 million the following year, when British troop numbers were boosted to 7,500, and the cost last year was £1.5 billion. This was largely due to the multiple orders from the MoD for hundreds of extra armoured vehicles to meet “urgent operational requirements”.

Force protection has become the key issue after the deaths of about 36 British service personnel, killed by roadside bombs and landmines while travelling in the lightly armoured Snatch Land Rovers, sent to Iraq and Afghanistan from Northern Ireland.

Extra measures have also had to be taken to improve the survivability of helicopters in the harsh environment of Iraq and Afghanistan, and to fit better communications to all aircraft.

Costs for Operation Herrick will rise further if ministers give in to pressure from Barak Obama, when he becomes US President in January, for Britain to send more troops to Afghanistan. The Government has not ruled out sending more troops, but with 8,100 already serving in Afghanistan, Washington has been told that other Nato countries should be first in line to boost troop numbers.

In anticipation of British troop reductions in Iraq in the spring, a restructuring of coalition regional commands was announced yesterday. Until now the region south of Baghdad has been divided into three multinational divisional areas — centre, under US control; centre-south, under the Poles; and southeast, controlled by the British.

In future, there will only be one multinational divisional command headquarters south of Baghdad, which will be run by the Americans, who will also take “overwatch” control of three provinces that were once the responsibility of the British — Muthanna, Dhi Qar and Maysan, the security for which was handed over to the Iraqis some time ago.

The British southeast area of responsibility will be confined to Basra.

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