Defence Secretary Philip Hammond: a business brain to reshape our Forces The language of the business school can rile old-school commanders, who question what any politician can tell them about the unique business of soldiering. But younger officers, who can sometimes resemble MBA students themselves, appreciate his clinical analysis. And unsentimental does not mean unsympathetic. Mr Hammond can be quite frank about the consequences the Coalition's decisions can have on the Armed Forces and their families. He was in Bad Fallingbostel this week to talk about plans to bring back to the UK the 20,000 British military personnel still in Germany as a relic of the Cold War. Half are due back by 2015, and all by 2020, but finding somewhere to put them and their families in Britain is a huge financial challenge for the Ministry of Defence. So much so that Mr Hammond cannot promise that those targets will be met, meaning he cannot tell soldiers and their wives (many of them German) where and when they will be posted next. We are creating uncertainty for people. Uncertainty is always unwelcome," he admits. We are going as fast as we can, but until we can [settle the timetable] there will be this cloud of uncertainty. It is debilitating. It's not just the Army in Germany that faces uncertainty. Many soldiers in Britain are waiting to find out if the units in which they serve face abolition or merger in a reorganisation meant to match the Army's structure to its falling numbers: manpower is to shrink from 102,000 to 82,000. The Army is getting smaller. Clearly the Army can't get smaller by 17 per cent without losing some units," says the no-nonsense minister. Does that mean losing "cap-badges," traditional regimental names such as the Black Watch and Green Howards? David Cameron is known to fret about such a loss, but Mr Hammond is less squeamish. The ancient cap badges have largely gone - they are attached in brackets to some unit names. I can't say to you that there will be no loss of battalions in the infantry as we downsize the Army. We are looking at the options. The last restructuring in 2005 led to protests, especially in Scotland. Regimental campaigners argued that the historic identities of individual units, tied to their traditional recruiting grounds, are vital in persuading young men to sign up. Mr Hammond is unimpressed with that argument. We have to look at where the Army is recruiting. We have units that are significantly under-recruiting, we have units which are recruiting a significant part of their strength from foreign and Commonwealth countries," he says, effectively putting under-recruited Scots units on notice. It is not the case that all Army units as they once did have strong geographical recruitment ties. Army units are not the only sacred cows likely to fall under Mr Hammond's knife. Next week, he will ask the National Security Council to approve his decision to kill Dr Fox's plan to put catapult-launched F35 fighters on the Royal Navy's new aircraft carriers. Instead, the Coalition will opt for jump-jets, removing the costs of the catapult gear. The decision will be controversial, not least because military analysis suggests that catapult-launched planes pack more punch than jump-jets. So which is the better aircraft? It depends on what you want to do. Different aircraft do different things. It's about thinking about the military effect we want to deliver then working out the most cost-effective way to deliver it. And what does it say about Dr Fox's Strategic Defence and Security Review that, barely 18 months after publication, Mr Hammond is considering reversing one of its biggest decisions? "It says the facts have changed," he says, a tacit admission that the cost of the catapults was woefully underestimated in review. The process was based on the assumption that cuts would end and defence spending would rise between 2015 and 2020. But George Osborne has subsequently admitted that two more years of spending cuts will be required to balance the books, austerity lasting until at least 2017. A close ally of the Chancellor, Mr Hammond is clear that the Treasury will not find its extra savings from his department. We are in the middle of doing a major and complex transformation project in defence. We have cut the size of the Armed Forces as far as it is prudent to do so," he says. We have an agreement with the Treasury that we will have a level trajectory after that. Still, thanks to his friend in the Treasury, the Armed Forces are facing at least four years of real-terms pay cuts. As some serving personnel point out, this from a government that this year increased benefits payments by 5.2 per cent. Other Conservatives loudly and angrily blame their Liberal Democrat partners for that. Mr Hammond feels much the same, but expresses irritation by raising his eyebrows, not his voice. The 5.2 per cent was a freak of the system. It is very unfortunate. We are in a coalition government. We take decisions collectively and we defend them collectively. His line on military pay is equally balanced. The point about real pay cuts for the Armed Forces is a fair point, but people across the economy are experiencing pay cuts. But surely the Forces are different, a special case? They do get different treatment. We doubled the operation allowance - that's £2,500 tax-free, a significant sum. They are different. But there are a lot of deserving people across the economy, including some key public sector workers, who will be facing a real pay squeeze. And cutting someone's pay does not mean they are held in less esteem, he insists. One of the things that is immensely important to the military is their relationship with society as a whole. Public appreciation of the military is currently at an "all-time high," he says, which is largely down to Afghanistan. But the military role in civil contingency work - preparing to replace striking fuel tanker drivers; helping with flood relief; protecting the Olympics - also plays a part. They don't want to do it all the time, but being able to step in and bail society out occasionally - it's another tick in the box. It reminds society how much we owe to the military.