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Spending Review: Ministers agree MoD budget cut Spending Review: Ministers agree MoD budget cut
(40 minutes later)
Cutbacks in the UK's £37bn annual defence budget have been finalised ahead of the chancellor's Spending Review, the BBC understands.Cutbacks in the UK's £37bn annual defence budget have been finalised ahead of the chancellor's Spending Review, the BBC understands.
The reduction is expected to be less than the 10% the Treasury had been seeking, possibly around 8%. The reduction is expected to be less than the 10% the Treasury had been seeking, possibly in single figures.
The Army is not expecting significant cuts in personnel, while the Navy will get two new aircraft carriers. The Army is expected to have to cut personnel, although the Navy will get two new aircraft carriers.
It is thought the ships will receive fewer new aircraft, and the overall size of the Navy will be reduced. But it is thought the ships will have fewer new aircraft and the overall size of the Navy's fleet will be reduced.
Details of spending cuts are due to be published next week. Details of spending cuts are due to be published on Wednesday.
A senior Downing St source told the BBC the review would not see any substantial cuts made to the number of Army personnel. It is believed that the Joint RAF/Fleet Air Arm Harrier force may face the axe, while some squadrons of RAF Tornado jets could be saved instead - although some air force bases will close.
The source said it would also see £750m saved over four years on Trident, although it was not clear how those savings would be made. The Army may have to cut up to 7,000 or so personnel over the next five years, while the MoD itself could face substantial cuts to its civilian staff.
Mr Cameron had the "highest respect" for his defence chiefs, and had an "excellent relationship" with Defence Secretary Liam Fox, the source added. Sources say £750m will be saved over four years on the Trident nuclear deterrent missile system but it is not yet clear how those savings will be made.
BBC defence correspondent Caroline Wyatt says the MoD still has a £38bn black hole in its procurement budget - inherited from the previous government - which mean the cuts need to be deeper than the headline figure suggests.
Speaking on BBC Radio 4's Today programme, Michael Clarke, of the Royal United Services Institute think tank, said Army numbers had to be cut.Speaking on BBC Radio 4's Today programme, Michael Clarke, of the Royal United Services Institute think tank, said Army numbers had to be cut.
But that would not happen before 2015, when a withdrawal from Afghanistan would be under way, he said.But that would not happen before 2015, when a withdrawal from Afghanistan would be under way, he said.
Mr Clarke described the defence cuts as a "bellwether" for Nato, which would be watching closely to see where the axe fell.Mr Clarke described the defence cuts as a "bellwether" for Nato, which would be watching closely to see where the axe fell.
On the same programme, former First Sea Lord Admiral Lord West said: "Politically, I can understand how the government finds it difficult to cut Army numbers when our soldiers are dying in Afghanistan."On the same programme, former First Sea Lord Admiral Lord West said: "Politically, I can understand how the government finds it difficult to cut Army numbers when our soldiers are dying in Afghanistan."
He said that "strategically it would make sense" to cut numbers by 20,000.He said that "strategically it would make sense" to cut numbers by 20,000.
After what some defence sources have called a "bloody night", it has emerged that the MoD budget was finalised after the prime minister personally intervened, insisting the armed forces must have enough money to do their job.
David Cameron ultimately came down on the side of the Defence Secretary Liam Fox, who has fought a tough battle against the Treasury's desire for cuts of at least 10%.
It is believed the final settlement puts the cuts to the MoD's £37bn a year budget somewhere in the region of 8%, although with the "black hole" in the defence budget inherited from the Labour government, that could equate to rather higher real cuts.
'Can live with''Can live with'
There has been intense debate inside government about where the cuts should fall within the defence budget.There has been intense debate inside government about where the cuts should fall within the defence budget.
Initial demands by the Treasury were for reductions of between 10% and 20%, with many options put before the National Security Council.Initial demands by the Treasury were for reductions of between 10% and 20%, with many options put before the National Security Council.
Earlier this week it was believed at the MoD that a settlement was close at about 7%, but the Treasury came back demanding cuts of 10%.Earlier this week it was believed at the MoD that a settlement was close at about 7%, but the Treasury came back demanding cuts of 10%.
Military chiefs said that would damage the front line in Afghanistan, something Mr Cameron had previously made clear he was not prepared to do.Military chiefs said that would damage the front line in Afghanistan, something Mr Cameron had previously made clear he was not prepared to do.
Caroline Wyatt says that although the exact settlement figure has not been revealed, it is something the defence secretary "can live with". Colonel Richard Kemp, a former British commander in Afghanistan, said: "We will probably now get a fairly vague announcement this week and then a number of quieter readjustments to it over the next few months."
He said there was a huge amount of "corrosive" uncertainty about the future of the armed forces which was "potentially a real morale problem".
Col Kemp also said he felt Britain could no longer afford the aircraft carriers which he claimed had been promised as a sop to the Navy.
The BBC understands that both planned aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales, will be built - but the Royal Navy stands to lose a significant portion of its surface fleet, while the order for the joint strike fighters for the carriers will be scaled down substantially.The BBC understands that both planned aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales, will be built - but the Royal Navy stands to lose a significant portion of its surface fleet, while the order for the joint strike fighters for the carriers will be scaled down substantially.
The carriers are being constructed in sections in Scotland, Portsmouth and north Devon.The carriers are being constructed in sections in Scotland, Portsmouth and north Devon.
Speaking on the Today programme, Lord West said he would be "delighted" if the two carriers were built.Speaking on the Today programme, Lord West said he would be "delighted" if the two carriers were built.
"They provide four and a half acres of British sovereign territory with no over-flying rights, we don't have to put troops on the ground with all the risks of terrorism and so on, and we can influence the world and keep a stable globe, which is very important for our wealth in this country," he said."They provide four and a half acres of British sovereign territory with no over-flying rights, we don't have to put troops on the ground with all the risks of terrorism and so on, and we can influence the world and keep a stable globe, which is very important for our wealth in this country," he said.
But Scottish National Party MP Angus Robertson, who was two RAF bases in his Moray constituency, said any cuts would be bad news.But Scottish National Party MP Angus Robertson, who was two RAF bases in his Moray constituency, said any cuts would be bad news.
"What we can read between the lines is, that the larger service in Scotland, which is the RAF - bigger than the Navy, bigger than the Army - is going to be hit disproportionately."What we can read between the lines is, that the larger service in Scotland, which is the RAF - bigger than the Navy, bigger than the Army - is going to be hit disproportionately.
"So, Scotland is going to come out of this SDSR [Strategic Defence and Security Review] badly," Mr Robertson. "So, Scotland is going to come out of this SDSR [strategic defence and security review] badly," Mr Robertson.
It is believed that the Joint RAF/Fleet Air Arm Harrier force may face the axe, while some squadrons of RAF Tornado jets could be saved instead - although some air force bases will close.
The Army may have to cut up to 7,000 or so personnel over the next five years, while the MoD itself could face substantial cuts to its civilian staff.
Sources say £750m will be saved over four years on the Trident nuclear deterrent missile system but it is not yet clear how those savings will be made.