Ministry of Defence faces £2 billion more cuts But sources have denied that there will be any further reductions to troop numbers, which are already being reduced by 32,000 soldiers, sailors and airmen across the three services. Mr Hammond said: "We had to take tough decisions to tackle the £38bn blackhole left by Labour at the MoD, but we are now close to achieving a sustainable and balanced budget for the first time in decades. This will mean we can again start ordering new equipment for the Armed Forces. We are still refining individual equipment projects, assessing each case for contingency and risk but I am increasingly confident that the MoD is turning a corner and will soon have a clear and affordable programme. We'll be spending over £150 billion on equipment and equipment support over the next decade. There is certainty that even with the Whitehall redundancies, the majority of the £2 billion savings will be achieved by a "ruthless approach" to renegotiating existing military contracts with the private sector. As part of the MoD reforms the Director General Finance will become one of the department's main power brokers and will now sit on the Defence Board, which makes the key decisions about the future of the armed forces. In a radical departure from previous administrations defence chiefs will no longer be able to spend money "they don't have," according to a senior source. One senior defence source said: "The days of dieting followed by binge spending are over. The top brass will no longer be able to spend what they don't have. Various "options" up for cutting were discussed at a Defence Board meeting held last Friday but it is unlikely that any new measures will be finalised and announced for several weeks. The £38 billion overspend has been reduced by a 7.5per cent cut to the MoD's annual budget designed to save around £10 billion over four years, together with cuts to some of the military's manpower and equipment programme. Some of the most controversial cuts were to the Royal Navy, which saw the Fleet Air Arm's entire Harrier force retired eight years early in a move which will save £1 bilion. All but two of the aircraft have been sold in a £110 million deal to the US Marine Corps, where the Harrier is still in service and admired for its capabilities. The Royal Navy also saw its strength fall by 5,000 personnel, losing four Type 22 Destroyers - a move which meant a saving of £235m - while as the Service's flagship, the carrier Ark Royal, was withdrawn, which alone will mean a cost saving of around £105m. The RAF also saw its personnel fall to its lowest level since its formation in 1918 with the loss of 5,000 airmen and women either through redundancy or natural wastage. It suffered a series of big cuts, most notably the cancellation of the £3.6 billion Nimrod MRA4 programme before the multi-million pound surveillance planes came into service. One of the Harrier's former bases, RAF Cottesmore, will close at the end of March and the future of the other RAF Wittering remains in doubt. The numbers of operational fighter aircraft - made up of the Tornado strike aircraft and the Typhoon - will also fall. Two RAF bases in Scotland will also become Army barracks to house troops being withdrawn from Germany. Cuts to the Army are still under discussion but its manpower will be reduced by almost 20,000 over the next eight years and for the first time since 1945 will be based solely in the United Kingdom with the complete closure of bases in Germany. Dozens of tanks and artillery pieces could be scrapped or mothballed and up to six of the Army's 36 infantry battalions could also be axed. But the cuts have left many in the military wondering whether the cuts have undermined Britain's fighting capability. One senior defence source said: "Britain has an RAF and Royal Navy that has just lost 72 planes, a Navy with no dedicated air cover and an Army with a morale problem. We are not best placed to deal with another Falklands-like crisis.