The Prime Minister made his move after being told by the new head of the Army that proposed reductions in the Forces threatened Britain’s mission in Afghanistan.
General Sir Peter Wall, the Chief of the General Staff, made clear to Number 10 that he could not accept cuts in Army numbers and training which would hamper the Afghan operation. In the wake of Sir Peter’s warning, Downing Street sources last night said Mr Cameron had blocked a Treasury demand for a 10 per cent cut in the defence budget.
“He has intervened against the Treasury. The Army will be protected,” said a source.
Mr Cameron told the Treasury that he would not accept substantial reductions in Army numbers. Downing Street sources added that Mr Cameron was insistent that more savings be made from Trident.
Final details of the budget deal were still being hammered out last night in Whitehall, and military sources refused to declare victory in the power struggle.
Mr Cameron’s intervention followed a day of threats from senior defence figures. The angry response from the top brass came after the Treasury attempted to force the Ministry of Defence to make cuts deeper than those which had been agreed previously. Military chiefs had described the move as a “betrayal”.
It had appeared on Thursday that Dr Liam Fox, the Defence Secretary, and George Osborne, the Chancellor, had agreed a deal for a seven per cent cut to the MoD budget. But the Treasury position hardened yesterday morning, with officials making renewed demands for 10 per cent cuts.
The last-minute switch caused fury at the MoD, and Forces chiefs were sent to Downing Street for crisis talks. In private meetings, senior commanders told Mr Cameron’s team the bigger cuts package would undermine the Afghan war and potentially force Britain into a humiliating early withdrawal.
According to sources in No 10 and the MoD, Gen Wall made clear he was not prepared to support the cuts being demanded. However, they said he did not go as far as threatening to resign.
Army sources said the full cut demanded by the Treasury would have meant a loss of 7,000 men and the removal of up to four front-line infantry battalions. Army training operations would also have been affected, ultimately impacting on the Afghan operation, the Army warned.
The Prime Minister will spend the weekend trying to finalise the defence and spending review at Chequers. The strategic defence review will be unveiled on Tuesday, followed a day later by the comprehensive spending review.
Mr Osborne has been pushing for Dr Fox to accept a budget cut of 10 per cent. But after weeks of wrangling, the Defence Secretary believed he had secured a cut of just 7 per cent.
When the Treasury appeared to renege on that deal, there was thinly disguised fury directed towards Mr Osborne.
One senior defence figure said: “The Chancellor doesn’t have the first idea of what we do. He doesn’t understand defence and he doesn’t like defence. He’s no better than Brown.”
A senior Navy figure added: “This was supposed to be settled, then the Treasury pulled the rug out from under us.”
On Thursday, Hillary Clinton, the US secretary of state, and Robert Gates, the secretary of defence, both expressed fears over cuts to Britain’s Armed Forces.
The US is worried that Britain might fall short of the Nato standard of spending at least 2 per cent of GDP on defence. Yesterday, Mr Cameron’s spokesman refused to say whether that commitment would be met.
