Armed forces fear more manpower cuts The government's decision to cut military spending could trigger another sharp reduction in armed forces manpower, according to senior officials at the Ministry of Defence. As the full consequences of George Osborne's Autumn Statement begin to be realised, there are fears inside the MoD that the 2010 Strategic Defence and Security Review may need to be revised yet again unless the chancellor unexpectedly prioritises the armed forces in next year's Comprehensive Spending Review. Mr Osborne announced this week that the MoD, like many other departments, would see its budget cut by 1 per cent in 2013-14 and 2 per cent the following year. Those cuts will have no effect on the MoD in those years because the department can use some unallocated funds to offset the reductions. But the cuts mean that the baseline for defence spending in 2015-16 and beyond will be about £500m a year lower than the service chiefs had expected, leaving the MoD unable to finance its modernisation of the armed forces by 2020. "This is worrying," a senior MoD official told the FT. We signed up to a deal wrapped around the delivery of Future Force 2020 and its associated manpower figures. This assumption is almost certainly holed below the waterline. The [service] chiefs will feel [the government] has welched on the deal. The same official added: "There is much to be fought for over the next three months as the government negotiates with departments over the terms of the [Comprehensive] Spending Review. But the compound effect will be very damaging. It would almost certainly need a reopening of the SDSR core equipment programme and the current settlement on army numbers. Another senior MoD official said: "The people in the finance arena look to be in shock. There are clearly some awkward discussions to be had in the next few weeks on how you can manage these cuts without more reductions in capability. The MoD, which has a £34bn budget, has been hit harder than most government departments by the chancellor's drive to restore order to public finances. The regular army has been cut to 82,000 personnel, its lowest level since the Napoleonic wars, and equipment across all three services has been slashed. At the same time, there has been frustration in the MoD that David Cameron shows no inclination to reduce his demands on UK armed forces. "The MoD retains a relatively low place in the departmental pecking order in contrast to health, education and international development," said Malcolm Chalmers, of the Royal United Services Institute, a think-tank. The MoD will therefore find itself on an even lower baseline after the spending review than the new one they have just been given. Professor Chalmers believes the MoD may need to consider further cuts to the regular army. "By doing this, it could reduce costs on personnel, pension costs and the rebasing of UK land forces," he said.