Cuts signal end to Cold War strategy

Speaking in London on the day that plans were leaked suggesting military helicopter numbers could be cut by a fifth as austerity measures begin to bite, Mr Fox said the ongoing Strategic Defence and Security Review (SDSR) must "shape Britain for the 21st century" and concentrate on future dangers rather than the threats of the past.

The SDSR will assess Britain's future defence needs while outlining where the 10 to 20 per cent cuts that the Ministry of Defence (MoD) has been ordered to make can be found.

The results will be announced at the end of October.

Reports suggest the Army could lose one of its brigades in Germany, the Navy could see one of two new aircraft carriers cancelled, the Royal Marines could be brought under the Army's control and the Royal Air Force could shrink to its smallest size since the First World War.

Dr Fox ruled out any merger of the Royal Navy, Army and RAF, however, but suggested numbers of senior officers could be reduced.

He said: "We will also consider whether the current senior rank structure across the services is appropriate for the post-SDSR world.

"We cannot demand efficiency from the lower ranks while exempting those at the top."

Dr Fox made clear the importance he is placing on the review, adding: "This needs to be the defence review that puts the Cold War to bed."

But he stressed again that the Government remained committed to replacing Britain's Trident nuclear deterrent, despite criticism that it too is an outdated and expensive legacy from the 20th century.

The issue has been complicated by internal rows within the Government over who will pay for the replacement system.

Previously the cost of the new submarines was funded directly by the Treasury – but Chancellor George Osborne made it clear last month that the full cost must now come out of the defence budget.

When asked about the MoD's ability to pay for Trident, Dr Fox said: "How that budget is funded to take account of that is a conversation that is constantly ongoing with the Treasury."

Labour Shadow Defence Secretary Bob Ainsworth said the Government needed to end the public squabbling over who will fund Trident.

"Until that fundamental question is resolved it will be impossible for the strategic defence and security review to proceed effectively," he said.

The leaking of a document suggesting military helicopter budgets could be slashed by 20 per cent is likely to fuel a further political storm. Options outlined in the document include scrapping the entire 1.7bn fleet of 62 new Lynx Wildcats for the Navy and Army, phasing out the Navy and RAF's Sea Kings and the "deletion" of the RAF's Puma helicopter.

The document is particularly explosive because, while in opposition, Tories and Liberal Democrats argued Labour was putting troops' lives at risk by failing to provide enough helicopters to troops in Iraq and Afghanistan.

The Ministry of Defence refused to comment on the report yesterday.