As big spenders, the MoD faces big budget cuts

The MoD has to find £245 million in savings next year. Photo: Reuters

All government departments will have to cut "resource budgets" by 1% in 2013/14 and by 2% by 2014/15.

The Treasury wants all of them to cut staff and running costs in a way the Department of Education has already shown can be done.

If similar moves were made across all government departments, the Chancellor thinks he can save an additional £1 billion.

The target for savings depends on the department's budget (although health and schools have been protected).

The savings at the Ministry of Defence are particularly big - as they are one of the biggest spending departments.

The MoD must find savings of £245 million next year and £490 million the year after.

If this is added to the other figure in the Autumn Statement today (£650 million handed back from an underspend in Afghanistan) the figures start to look very large.

The Afghanistan money does not come out of the MoD budget. It comes from the Treasury's Special reserve.

Nonetheless, some newspapers may add up the three figures above and claim that £1.38 billion, that was due to be spent on troops, is now being saved.

Money for troops on the frontline is always a sensitive area for the government.