£38bn defence 'black hole' filled

A £38 billion black hole in the UK's defence budget has been eliminated, Defence Secretary Philip Hammond has confirmed.

The Defence Secretary told the House of Commons that the Government had balanced the books as he admitted "tough decisions" were required to fill the gap.

But he refused to release specific details of costings, citing national security and commercial sensitivities.

Despite now having £8 billion headroom in the overall 10-year defence programme and a £4 billion centrally-held contingency fund, Mr Hammond said planned redundancies in the forces would still go ahead.

In a statement to the Commons, Mr Hammond said there had been a "woeful" lack of spending restraint in the Ministry of Defence in the past.

He insisted he had been assured the "prize for good behaviour" now would not be a "Treasury raid" on the department's budget.

The Secretary of State insisted the department would neither underspend or overspend.

"We will manage these budgets to the wire," he added.

The Chief of Defence Staff, General Sir David Richards, admitted in the past that the military, bureaucrats and politicians had "worked in a spirit of optimism rather than realism".

"We were all guilty to a degree," he added.