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5. Operating costs
2001   2000   1999     £m   £m   £m   Staff costs:               Wages and salaries 3,954   3,754   3,366     Social security costs 313   316   275     Pension costs (note 30) 326   167   176     Employee share ownership scheme (a) 32   59   64   Total staff costs 4,625   4,296   3,881   Own work capitalised (693 ) (498 ) (428 ) Depreciation (note 19) 3,045   2,752   2,581   Amortisation and impairment of goodwill and other intangibles (note 18) 3,386   89   –   Payments to telecommunications operators 3,802   3,086   2,120   Other operating costs (b) 6,594   5,634   5,151   Total operating costs 20,759   15,359   13,305   Operating costs included the following:             Redundancy charges 104   59   124   Research and development 364   345   268   Rental costs relating to operating leases, including plant and equipment hire £15 million (2000 – £12 million, 1999 – £9 million) 166   189   185   Foreign currency gains (50 ) (26 ) (88 ) Amortisation of goodwill and exceptional items comprising:               Exceptional costs relating to impairment of goodwill 3,000   –   –     Exceptional credit for rates refunds, relating to prior years (193 ) –   –     Exceptional costs relating to the write off of subscriber acquisition costs (c) 7   –   –     Exceptional costs relating to the write off of Viag Interkom IT systems 43   –   –     Exceptional costs relating to the proposed closure of the BT Cellnet analogue network:                 Depreciation –   37   –       Other operating costs –   10   –     –   47   –     Exceptional costs relating to the disengagement from MCI:                 Staff costs –   13   10       Depreciation –   11   13       Payments to telecommunication operators –   18   14       Other operating costs –   22   32     –   64   69   Total exceptional items 2,857   111   69   Goodwill amortisation 373   89   –   Total amortisation of goodwill and exceptional items 3,230   200   69       (a) Amount set aside for the year for allocation of ordinary shares in the company to eligible employees. (b) No charge for the cost of providing incremental pension benefits for employees taking early retirement was made in the years ended 31 March 2001, 2000 and 1999 in view of the combined surplus in the BT Pension Scheme disclosed by the actuarial valuations as at 31 December 1999 and 1996, and the amount provided for pension costs within provisions for liabilities and charges. (c) The accounting of all the BT Wireless operating units has been aligned; this has resulted in a write off of previously capitalised costs in certain non-UK operations.
The directors believe that the nature of the group’s business is such that the analysis of operating costs required by the Companies Act 1985 is not appropriate. As required by the Act, the directors have therefore adapted the prescribed format so that operating costs are disclosed in a manner appropriate to the group’s principal activity. The operating costs for the year ended 31 March 2001 in the table above, include the following amounts relating to acquisitions made in the year.
2001   £m Total staff costs 65 Depreciation 76 Amortisation of intangibles 8 Payments to telecommunications operators 138 Other operating costs 246 Total operating costs 533
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