Philip Hammond defends budget cuts at MoD DEFENCE Secretary Philip Hammond has hit back at critics who claim the armed forces are suffering unnecessary cuts because of his "overzealous" austerity drive. Senior sources reportedly complained that Hammond's cautious approach meant the defence budget was underspent by almost £2 billion at a time when thousands of military personnel are losing their jobs. But Hammond said yesterday his critics had no idea how the defence budget worked, while the Ministry of Defence described the complaints as "financially illiterate." The row comes after Hammond was heckled by former soldiers during his speech to the Conservative Party conference in Manchester over cuts to the army. MoD accounts show it spent only £37.7bn of its £39.5bn budget in 2012-13. The unspent £1.8bn was reported to include £250 million for new equipment, while a further £200m was allocated for wages but not spent because more personnel than expected chose to leave. One "senior MoD" figure was reported as saying: "Philip Hammond is being overzealous in his pursuit of austerity at the MoD. His cuts to the budget have been unnecessarily hard. In a statement yesterday, Hammond retorted: "These retired "senior military figures" are presumably the same people who presided over an out of control defence budget that led to the previous government sending troops into battle without the proper equipment needed to protect them. We now budget prudently and then roll forward any underspend to future years, allowing us to place new equipment orders. An MoD spokesman said the underspend reflected better control of equipment projects.