Philip Hammond has insisted that he is "not looking at reducing manpower" in the Armed Forces ahead of the upcoming Comprehensive Spending Review.
The Defence Secretary his aim is "forces that will be smaller than we've had in the past but better-equipped, more mobile, more capable."
"In the current spending review, all of the work that we're doing is looking at efficiency savings that could be taken," he said.
"We're not looking at reducing manpower; we're not looking at reducing our equipment programme."
David Cameron has sought to play down fears raised by the head of the Army about the impact of further cuts on departments including the Ministry of Defence.
The Prime Minister insisted the UK has the "fourth largest defence budget of any country anywhere in the world" and that a "clear commitment" had been made to their equipment budget, adding that there will be no futher cuts to Forces personnel, other than those already announced.
But he warned that "difficult decisions" are being taken under the Coalition's austerity programme and warned that no department is immune from making savings.
Shadow Treasury Minister Chris Leslie has said it is "totally chaotic" for the government to be conducting treasury negotiations in public.
Mr Leslie insisted that the upcoming spending review should get the economy moving with a "long term plan for jobs and growth".
It's totally chaotic for the government to be conducting spending negotiations in public this way, with big departments like defence and work and pensions yet to reach agreement.
And the reason why George Osborne has been forced to ask for more cuts is because his total failure on living standards and growth has led to billions more borrowing than he planned. Far from balancing the books the deficit is now set to be over £90 billion in 2015.
– Shadow Treasury Minister Chris Leslie
But the longer David Cameron and George Osborne plough on regardless, the more difficult the inheritance Labour will face in 2015. Our task will be to turn things around on growth and living standards and deal with the deficit in a fairer and more balanced way.
As a further six government departments agree spending cuts ahead of the Spending Review, big spenders, such has the Department of Work and Pensions and the Ministry of Defence, have yet to come to an agreement.
More than half of Whitehall has now agreed a settlement but around two thirds of the planned reductions have yet to be finalised.
– Chris Leslie, shadow financial secretary to the Treasury
It's c this way, with big departments like defence and work and pensions yet to reach agreement.
And the reason why George Osborne has been forced to ask for more cuts is because his total failure on living standards and growth has led to billions more borrowing than he planned.
Far from balancing the books the deficit is now set to be over £90 billion in 2015.
The Government has announced new plans to protect the Police’s counter terrorism capabilities in 2015/16, ahead of the Spending Review.
The Treasury also announced that six further provisional Spending Round settlements have been agreed.
These include: Home Office, DEFRA, DCMS, Scotland Office, Wales Office and the Law Officers Department (incorporating CPS, TSOL and SFO).
With 12 days to go, only 10 departments remain to be settled.
Today’s provisional settlements show we continue to make real progress towards the savings we need while protecting priority areas.
Counter terrorism policing is a crucial part of our national security and I took no convincing of the need to protect this area.
Given recent events in Woolwich, we cannot compromise on our national security.
– Danny Alexander, Chief Secretary to the Treasury
None of the spending choices we make are easy, but ensuring the UK can pay its way in the world is vital to our long terms prosperity.
Settling over half of Departments with two weeks to go shows how committed the whole of Government is to dealing with the deficit.
The six provisional settlements amount to:
- Savings of £1.1bn towards the £11.5bn savings target announced at Budget 2013.
- Taken with the near £1.5bn savings delivered at Budget and the £1bn of savings delivered in the first phase of settlements means, this brings total savings to £3.6bn, nearly a third of the way towards the £11.5bn.
- Around 8% of their combined budgets.
A warning from Chief of the General Staff General Sir Peter Wall over the risk of spending cuts comes with the MOD under pressure to deliver its share of £11.5 billion in savings across Government.
Defence has some protection in the 2015/16 review, to be unveiled on June 26. It will be guaranteed a 1% increase in equipment budgets from 2015.
But Defence Secretary Philip Hammond has still been asked to find a 5% cut in other spending.
- 2010 budget cuts mean the Army is already being reduced from 102,000 to 82,000.
- 2,860 personnel across all three services were made redundant in September 2011.
- A further 3,760 went in a second tranche last June.
In response to the head of the Army's warning that budget cuts could be "quite dangerous, quite quickly", Labour's shadow defence minister Kevan Jones said:
The Government have cut the Army without a replacement plan in place. The country will worry about strategic shrinkage by stealth.
This stark warning underlines that the Government have taken a huge gamble.
The country will worry that reduced numbers in the absence of reform will limit Britain's ability to meet our ambitions in the world. Our services' morale is continuing to fall.
– Shadow defence minister Kevan Jones
There are worrying skills shortages in the Army. Rather than salami slicing, strategic purpose should drive the capabilities we have.
Labour has argued for our forces to be reformed around the principles of adaptability and prevention, to focus on training others to defend themselves and trained in stabilisation and language skills. Ministers, by contrast, have focused on savings over strategy.
In response to the head of the Army's warning over potential cuts to the military budget ahead of the Chancellor's spending review later this month, the Ministry of Defence has said:
Like all Whitehall departments we are currently negotiating our financial settlement for the 2015-16 Spending Review.
Although no final decisions have been taken we have been clear that we would first & foremost seek to find genuine efficiencies that would enable us protect front-line capabilities and protect military manpower numbers.
Whilst this process is ongoing it would be inappropriate to comment further.