The Report of the Iraq Inquiry

reconsider his position that non‑UOR NACMO should be contained within the

UOR ceiling.

135.  Mr Hoon attached a spreadsheet showing the MOD’s actual and estimated costs

(to April 2003) for “Iraq contingency planning”, which totalled £1.65bn.

136.  Copies of Mr Hoon’s letter were sent to Mr Blair and Mr Straw.

137.  A Treasury official advised Mr Brown on 17 December that he should agree both

of Mr Hoon’s requests.96 On UOR costs, the official advised:

“Some of this [UOR] spending is arguably for equipment that would have been

bought anyway later … We should stress that in such cases we will claim back

by either docking MOD’s EYF, or reducing their Estimates accordingly next year.”

138.  On non‑UOR NACMO, the official advised that if preparations were to move

forward on the track agreed by Mr Hoon and Mr Blair, access to the Reserve was

necessary. Preparing a force would cost about £650m and maintaining it at a state of

readiness about £200m a month, whether the UK went to war or not. The official advised

Mr Brown that the Treasury should put in place arrangements “that keep the costs

clearly on the agenda”, and that Mr Brown should ask Mr Hoon for monthly reports on

current and planned activities. Those reports would provide the basis for “ongoing joint

consideration of the costs of the strategy”.

139.  The official also advised that the £1.65bn figure represented the cost if the military

operation was “cancelled end of March, clear up and go home in April”. The costs

of war‑fighting, missiles and ammunition, and “post‑conflict stabilisation” would be

additional.

140.  Mr Hoon telephoned Mr Boateng on 23 December to discuss access to the

Reserve.97 Mr Hoon’s Private Secretary reported to MOD officials that Mr Boateng

had said that any system needed to meet the MOD’s needs, take account of “broader

financial implications”, and enable the Treasury to identify clearly that costs were

genuinely additional.

141.  Mr Boateng wrote to Mr Hoon later that day.98 Mr Boateng agreed to increase the

ceiling for UORs by £200m, to £500m. With regard to non‑UOR NACMO, Mr Boateng

stated that access to the Reserve was usually only granted once an operation had

been “declared”. In the current “preparatory phase”, he offered to create a “distinct

envelope for build‑up costs”, with four specific Heads of Expenditure (operation‑specific

training; air/sea charter; spares, maintenance and logistics; and other infrastructure

elements), with an initial allocation of £500m. The Treasury would authorise and monitor

expenditure within those Heads of Expenditure, rather than as a single block.

96 Minute Treasury [junior official] to Chancellor, 17 December 2002, [untitled].

97 Minute Watkins to MOD DG RP, 23 December 2002, ‘Iraq: Briefing the Chief Secretary to the Treasury’.

98 Letter Boateng to Hoon, 23 December 2002, ‘Iraq Costs’.

466