The conflict in Iraq has cost taxpayers £3.1bn up to the end of March, and since then the chancellor has put aside a further £400m in contingency funds.

He is expected to pledge more money in November's pre-Budget report.
The chancellor has been careful to avoid any suggestion that the war has put pressure on the public finances.

In March he said, 'It is because our public finances are so strong that in the parliament we have also been able to meet the extra and unanticipated costs of Iraq, Afghanistan and the fight against terrorism'.

The combined cost of these three operations topped £4.9bn last year, and are in addition to the normal running costs of the army.

Some analysts have claimed that the extra cost of going to war has put pressure on Gordon Brown's 'golden rule' only to borrow to invest over the economic cycle.