Total Group	2002 £m		2001 £m		2000 £m
Staff costs:   Wages and salaries	4,034		3,954		3,754
Social security costs	304		313		316
Pension costs (note 31)	361		326		167
Employee share ownershipa	25		32		59
Total staff costs	4,724		4,625		4,296
Own work capitalised	(659	)	(693	)	(498	)
Depreciation (note 21)	3,680		3,045		2,752
Amortisation and impairment of goodwill and other intangibles (note 20)	2,321		3,386		89
Payments to telecommunications operators	4,299		3,802		3,086
Other operating costsb	7,035		6,594		5,634
Total operating costs	21,400		20,759		15,359
Operating costs included the following: Redundancy charges and early leaver payments	252		118		59
Research and development	362		364		345
Rental costs relating to operating leases, including plant and equipment hire £51 million (2001 - £15 million, 2000 - £12 million)	283		166		189
Foreign currency gains	(1	)	(50	)	(26	)
Amortisation of goodwill and exceptional items comprising:   Goodwill impairment in subsidiary undertakings	1,955		3,000		-
Asset impairments	324		-		-
Costs relating to the Concert unwind	172		-		-
Costs relating to the demerger of mm02	109		-		-
BT Retail call centre rationalisation costs	68		-		-
BT Wholesale bad debt costs	79		-		-
Credit for rates refunds, relating to prior years	-		(193	)	-
Write off of subscriber acquisition costsc	-		7		-
Write off of Viag Interkom IT systems	-		43		-
BT Cellnet analogue network closure costs	-		-		47
Costs relating to the disengagement from MCI	-		-		64
Total exceptional items	2,707		2,857		111
Goodwill amortisation	352		373		89
Total amortisation of goodwill and exceptional items	3,059		3,230		200
aAmount set aside for the year for allocation of ordinary shares in the company to eligible employees.
bNo charge for the cost of providing incremental pension benefits for employees taking early retirement was made in the years ended 31 March 2001 and 2000 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.
cThe accounting of all the mm02 operating units was aligned; this 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.

Continuing activities	2002 £m		2001 £m		2000 £m
Staff costs:
Wages and salaries	3,680		3,465		3,472
Social security costs	270		273		290
Pension costs (note 31)	346		299		151
Employee share ownershipa	25		32		59
Total staff costs	4,321		4,069		3,972
Own work capitalised	(623	)	(642	)	(475	)
Depreciation (note 21)	3,266		2,689		2,457
Amortisation and impairment of goodwill and other intangibles (note 20)	2,079		291		10
Payments to telecommunications operators	4,289		3,736		3,010
Other operating costsb	5,522		4,357		4,011
Total operating costs	18,854		14,500		12,985
Operating costs included the following:
Redundancy charges and early leaver payments	247		109		59
Research and development	362		361		338
Rental costs relating to operating leases, including plant and equipment hire £51 million (2001 - £13 million, 2000 - £12 million)	277		156		155
Foreign currency gains	(1	)	(50	)	(26	)
Amortisation of goodwill and exceptional items comprising:
Goodwill impairment in subsidiary undertakings	1,955		200		-
Asset impairments	324		-		-
Costs relating to the Concert unwind	172		-		-
Costs relating to the demerger of mm02	98		-		-
BT Retail call centre rationalisation costs	68		-		-
BT Wholesale bad debt costs	79		-		-
Credit for rates refunds, relating to prior years	-		(193	)	-
Costs relating to the disengagement from MCI	-		-		64
Total exceptional items	2,696		7		64
Goodwill amortisation	121		88		10
Total amortisation of goodwill and exceptional items	2,817		95		74
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 and 2000 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.

	2002		2001		2000
Discontinued activities	£m		£m		£m
Staff costs:
Wages and salaries	354		489		282
Social security costs	34		40		26
Pension costs (note 31)	15		27		16
Total staff costs	403		556		324
Own work capitalised	(36	)	(51	)	(23	)
Depreciation (note 21)	414		356		295
Amortisation and impairment of goodwill and other intangibles (note 20)	242		3,095		79
Payments to telecommunications operators	10		66		76
Other operating costsa	1,513		2,237		1,623
Total operating costs	2,546		6,259		2,374
Operating costs included the following:
Redundancy charges and early leaver payments	5		9		-
Research and development	-		3		7
Rental costs relating to operating leases, including plant and equipment hire £nil (2001 - £2 million, 2000 - £nil)	6		10		34
Foreign currency gains	-		-		-
Amortisation of goodwill and exceptional items comprising:
Goodwill impairment in subsidiary undertakings	-		2,800		-
Costs relating to the demerger of mmO2	11		-		-
Write off of subscriber acquisition costsb	-		7		-
Write off of Viag Interkom IT systems	-		43		-
BT Cellnet analogue network closure costs	-		-		47
Total exceptional items	11		2,850		47
Goodwill amortisation	231		285		79
Total amortisation of goodwill and exceptional items	242		3,135		126
a No charge for the cost of providing incremental pension benefits for employees taking early retirement was made in the years ended 31 March 2001 and 2000 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.
b The accounting of all the mmO2 operating units was aligned; this resulted in a write off of previously capitalised costs in certain non-UK operations.