Revealed: £12bn hidden costs of Afghan war

The soaring cost of Britain's military campaign in Afghanistan is laid bare today, as a comprehensive analysis reveals that the cost of fighting the Taliban has passed £12bn. An Independent on Sunday assessment of the "hidden costs" of fighting since the Taliban was ousted in 2001 reveals that the bill works out at £190 for every man, woman and child in the UK – and would pay for 23 new hospitals, 60,000 new teachers or 77,000 new nurses.

The £12bn directly funded by taxpayers is swollen still further by millions poured into rebuilding Afghanistan every year by British charities and other non-governmental organisations. As the Ministry of Defence announced yesterday that another British soldier had been killed in Helmand province, there was no sign of an end to the spiralling human and financial costs of the campaign.

The Government has signalled its determination to step up its financial support for the UN-led operation, despite British forces enduring their bloodiest month since the start of the campaign. Former British commanders yesterday warned that the effort may have to continue for years more – but questioned the commitment of politicians to see the job through in the longer term.

By the middle of 2010, the Ministry of Defence will have spent more than £9bn on "Operation Herrick", the multinational Afghan campaign sparked by al-Qa'ida's 9/11 attacks. MoD outlay on fighting the war has risen from £221m in 2001-02 to an estimated £3.49bn this year. The 2009-10 figure will be almost £1bn more than last year and nearly five times the £738m dedicated to Herrick in 2006-07.

The bill has been inflated by a series of costs, including more than £700m for urgent equipment orders, a £2,300 "operational bonus" for thousands of troops – and even more generous allowances for civil servants seconded to the country. In a memo to the defence committee, the MoD blamed "additional security costs required for the local elections, and the costs of around 200 personnel providing counter improvised explosive device (IED) expertise".

Although the MoD's estimates cover spending on logistics such as wages, equipment and transportation, they do not disclose the "hidden" costs of war, such as support for injured troops, veterans and the families of personnel killed in action. Defence experts estimate that up to half the cost of new benefits payments and welfare provision every year will be directly attributable to the campaign in Afghanistan.

One indication of the financial impact of the conflict is the steep increase in claims to the Armed Forces Compensation Scheme (AFCS), which covers injury, illness and death caused by service since 6 April 2005. The value of lump-sum settlements of claims settled under the scheme has risen from £1.27m in its first year of operation to £30.2m last year. But the awards also come with ongoing "guaranteed income payments" costing more than £100m.

MoD figures show that at least 218 soldiers have suffered "life-changing injuries" since April 2006 alone – and more than 50 personnel have undergone amputations following injuries. The latest MoD analysis shows that, of 53 personnel who were seriously injured in Afghanistan in 2006 and 2007, 41 made claims to the AFCS. Only one of the 23 personnel very seriously injured (VSI) in Afghanistan during 2007 failed to make a compensation claim. The MoD has reported 214 casualties, including VSIs, during Operation Herrick since 2001.

During 2006-08, 34 UK personnel attended field hospital for psychiatric reasons, and 414 were assessed as having a psychological disorder on their return to Britain.

The casualties contribute to an MoD benefits bill which shows spending of more than £1bn a year on war pensions to veterans or their families. The bereaved partner of a member of the armed forces killed in action is entitled to a pension averaging £100 a week.

An MoD source said yesterday that the department feared the Afghan campaign was adding at least £250m a year to their spending on welfare services. But there is no evidence that the knock-on effects of Operation Herrick are going to subside any time soon.

MoD chiefs are also paying out to cover deaths and injury to civilians in Afghanistan. Independent estimates put the toll of Afghan civilians killed in the conflict as high as 30,000, and activists warn that the "collateral damage" of coalition activity is sapping local support.

The MoD is not the only department that is spending taxpayers' money in Afghanistan, however. The Department for International Development (DfID) has recently unveiled an ambitious plan that will push its total spending in the country to £969m between 2001 and 2012. The Foreign Office (FCO) has spent £230m on the Afghan campaign since 2006 alone, more than a third of it on an operation entitled "Strategic Programme Funds: counter-narcotics". In the six years after the Taliban were ousted, production of the opium which produced 90 per cent of the heroin on Britain's streets rose by 150 per cent.

The Foreign Secretary, David Miliband, will tomorrow make a keynote speech designed to reinforce the case for the UK staying the course in Afghanistan. Colonel Bob Stewart, former commander of British forces in the Balkans, said the Government had been "confused" about what it wanted to achieve in the area. He said: "The Government needs to have a crystal-clear aim to neutralise Afghanistan so it can't do us any harm either directly or implicitly. We've got to stay the course in Afghanistan."

Major General Patrick Cordingley, who commanded the 7th Armoured Brigade, the Desert Rats, said the original objectives – ridding Afghanistan of the Taliban and al-Qa'ida and reconstructing the country – had "gone out the window". He added: "There's no shame in saying we need a rest."

General Sir Hugh Beach, former deputy commander of British Land Forces, warned, "The British Army has done magnificently, but it's a long slog. You don't do it probably in two years or three – it might take five years or 10. Will we have the political will to stay there that long? I very much doubt it."

Afghan conflict in numbers

£12bn

Overall cost of Afghan campaign since 2001. Could have paid for 60,000 teachers, 77,000 nurses or 23 hospitals

400%

Increase in MoD spending on Afghanistan, 2006/07 to 2009/10

30,000

Estimate of the number of Afghan civilians killed as a result of the conflict

189

UK service personnel killed in Afghanistan since 2001. The latest death was confirmed yesterday

150%

Increase in Afghan opium production, 2001-07

£100

Average weekly war pension entitlement of widow/widower

4m

Bullets fired by UK forces in Helmand, Aug 2006-Sept 2007