David Cameron is on a collision course with UK military chiefs after the government was accused of reneging on a deal to guarantee that defence spending as a whole would increase.
As ministers appeared to send conflicting signals over defence spending, one senior defence figure warned that Downing Street risks provoking an angry backlash from the military top brass unless it stands by undertakings given at the time of the last defence review in 2010.
Sources familiar with the negotiations said Air Chief Marshal Sir Jock Stirrup, chief of the defence staff at the time of the strategic defence and security review in October 2010, signed up to cuts on the understanding that spending would increase after the next review.
This undertaking was cast into doubton Thursday when No 10 said the defence budget would not be protected from cuts in 2015-16, except for spending on equipment – which only accounts for 38% of the budget. No 10 rushed to clarify its position during the PM's trip to North Africa after it was reported that Cameron was sticking by a commitment given in 2010 that defence spending would increase in real terms after 2015. Downing Street confirmed that Cameron himself had been responsible for briefing journalists on his trip to Algiers. "He was asked a question," a No 10 spokeswoman said. "The prime minister has said that he did not resile from what he said back in 2010."
No 10 said Cameron's commitment referred only to the years after 2016-17. This leaves the defence budget open to cuts in 2015-16. A spending review for that single year is already under way in the Treasury, and the chancellor, George Osborne, who is looking for cuts, cannot afford to see the defence budget off limits. A pre-existing commitment that the defence equipment budget will rise by 1% in real terms from 2015-16 to 2019-20 still stands.
Cameron believes he was misinterpreted when newspapers, notably the Daily Telegraph, reported that defence spending would increase above inflation from 2015. There were signs that Osborne was alarmed by reports that the defence budget would rise in 2015-16. The chancellor is determined that the defence budget is not protected when other budgets, such as welfare and the Home Office, are not.
Philip Hammond, the defence secretary, tried to clarify the position in a round of radio and TV interviews on Thursday. He said he had been given a commitment that the equipment side of his budget – accounting for roughly half of MoD spending – would rise in real terms.
"I have a firm commitment that the equipment plan, which is a very large part of the defence budget, will rise in real terms by 1% a year between 2015 and 2020. That's a commitment that has previously been made and repeated since the chancellor delivered his autumn statement," he told BBC Radio 4's Today programme.
"But there is going to be a spending review for 2015-16 and I will go into that arguing the case for the resources that defence needs to deliver the plan that we have set out, Future Force 2020, and I am very confident that we will have a robust discussion about that."
The confusion prompted an angry reaction from sources familiar with the strategic defence and security review, which was unveiled on 19 October 2010, a month before Osborne announced the defence cuts in the spending review. "There was a very clear agreement with the defence chiefs who will not be pleased with today's shenanigans," one well placed source said. Hammond "sounded like a treasury minister and not a defence secretary fighting his corner. They had better watch out. The defence chiefs know how to fight their corner".
Cameron responded to the chaos when he was asked about the conflicting signals. Speaking to the BBC in Tripoli, Cameron said: "We have the fourth largest defence budget in the world and that isn't going to change. What matters most of all is that we make sure the budget is being spent on the things that our military need. Intelligence assets, transport assets, making sure we have special forces that are the best equipped in the world." Asked about the defence budget, he said: "We've set out our defence spending plans for the spending review period. We've also, unlike any other department, said we'll continue to increase spending on defence equipment ahead of inflation post 2015 … We have protected the defence equipment budget post, up to and after 2015..
