Malcolm Rifkind, the Secretary of State for Defence, who will announce the cuts after Cabinet approval next Thursday, has secured the backing of service chiefs and key Tory backbench MPs with assurances that some of the savings will be used to sharpen front-line defences. 'Sweeteners' to ease the political impact of the cuts are likely to involve orders for naval vessels, including a minesweeper and two amphibious assault ships.
John Major sought to neutralise any threat of a backbench revolt at an end-of-term meeting last night of the 1922 Committee of Tory MPs. Winning their support for his leadership, Mr Major said the defence cost study, known as Front Line First, would 'adjust for current priorities but then offer a period of stability after that'.
Ministers believe Mr Major is planning to lift Tory morale with a reshuffle on 20 July, deliberately timed to overshadow the election of Tony Blair as Labour leader the next day. MPs were told yesterday that the Commons will rise on 21 July, denying Mr Blair a platform at Prime Minister's questions until the autumn.
Mr Rifkind is fighting a rearguard action against the Treasury over a pounds 500m redundancy package. He is insisting the Treasury pay for up to 80 per cent of it, but Treasury ministers want it to be funded by the savings.
The defence cuts mean redundancy for more than 12,000 service people and 8,000 civilians. The Treasury asked for savings of pounds 750m a year on the pounds 23bn defence budget from 1996. Mr Rifkind's review - following the cuts in Options for Change - has exceeded the target in the third year, but he is insisting on retaining most of the savings to invest in equipment.
The closure of the Rosyth naval base - a key issue in the Monklands by-election - provoked an outcry from unions and the opposition parties, with a warning that it would 'seal the Tories' fate in Scotland'. Sir Nicholas Fairbairn, the Tory MP for Perth and Kinross, who is retiring at the next election, has threatened to resign his seat - he has a majority of only 2,094 - and force a by-election. The Tories would almost certainly lose.
Mr Major stonewalled in the Commons when he was challenged by an SNP MP that the base was to be closed. But ministerial sources who privately confirmed the decision had been taken are confident they can ride out the storm. Mr Rifkind has been careful to ensure that there are sweeteners in the package. Ian Lang, the Secretary of State for Scotland, joined the Overseas Policy Defence (OPD) Cabinet committee for the decision. The Rosyth dockyard will not close and the blow to the Scottish economy will be eased by the reprieve of the Benbecula missile range and the Pitreavie air-sea rescue centre.
The review will mean the closure of dozens of bases across Britain, but ministers estimate the redundancies will not exceed 800 in any single constituency.
Two hundred service jobs and up to 600 civilian posts are to be cut from the Gibraltar garrison.
Reasons for the cuts, page 2
Spending curbs, page 4