Defence Spending: Security agencies win £86m for terror fight

The cost of combating terrorism at home and abroad was underlined as the Chancellor announced major new handouts to the security services and to British troops in Iraq and Afghanistan.

MI5, MI6 and GCHQ will receive an extra £86.4m, bringing their total annual spending to £2.25bn this year, more than double their budget before the September 11 attacks.

And Mr Brown, who praised the "huge debt of gratitude to our armed forces", promised a further £400m for the operations in Iraq and Afghanistan, bringing the total expense of Britain's commitment in the two countries to £7.4bn.

Most of the extra cash for the security agencies will pay for speedier recruitment as they expand to their greatest strength for 50 years. The rest will be invested in high-technology surveillance equipment.

The moves follow a warning by Dame Eliza Manningham-Buller, the head of MI5, that it is aware of 30 terrorist plots against the UK and is keeping 1,600 individuals under surveillance.

Mr Brown told MPs: "At all times, as the Prime Minister and Home Secretary have emphasised, we will put the security of the country first." He also confirmed that the outcome of two reviews into the Government's counter-terrorism strategy will be set out by the Comprehensive Spending Review, which is expected this summer. One, conducted by the Chancellor, has examined the case for a single security budget.

The other, carried out by John Reid, the Home Secretary, has recommending splitting the Home Office in two. It is being considered by Tony Blair, with a decision expected to be announced within weeks.

The additional money for the armed forces will go towards their spiralling costs in Iraq and Afghanistan.

Britain's involvement in Iraq is now costing £1bn a year and has totalled more than £5bn since the US-led invasion in March 2003. Ministers will hope the amount will fall if they achieve their ambitions of scaling back the British troop presence in Iraq over the year. The deepening commitment in Afghanistan has cost a further £2bn.

A further £200m is to be allocated from reserves to peacekeeping activities around the world.

The soaring bills for the taxpayer do not take into the account the human costs of military action.

Sir Menzies Campbell, the Liberal Democrat leader, singled out the extra spending on Iraq war as an example of wasting money on an "unnecessary and unpopular" policy. He added: "We know the President made the decisions on Iraq, the Prime Minister made the case, the Chancellor signed the cheques and I'm afraid the Conservatives voted it through."

The Treasury said the £400m was a "prudent allowance" against commitments in Iraq and Afghanistan. "Conflict and instability elsewhere have the potential to enhance the risk to the UK," it said in supporting documents to the Budget. "International peace support operations continue to play a key role in global stability."

Liam Wren-Lewis, a researcher for the Iraq Analysis Group, a research organisation, said the Chancellor had failed to "come clean" over the military's expense. "We still know astonishingly little about how much it has cost the UK and almost nothing about how much the Government expects it will cost in future years. But in contrast to the United States, the UK Ministry of Defence isn't required to publicly report its Iraq spending in any detail."