The document depicts the depth of dissatisfaction with the review, which was announced by George Robertson, the Secretary of State for Defence, shortly after the general election last year.
Written by Jon Day, the MoD's director of defence policy, it says that "many personnel" see the review as the last chance to put right the problems of the armed services. If that chance is missed, then "they say they will leave", the document reports.
Soldiers, airmen and sailors are said to be suffering "change fatigue" from past reviews and upheavals, and that while short-term morale appears satisfactory, there is "diminishing longer term good will for the Government, the MoD and service chains of command".
The restricted report, circulated to Mr Robertson and senior civil servants, describes the results of a three-week assessment of 1,500 personnel from all three services last year at 14 different establishments. It covered all ranks from private up to two-star senior officers.
In a damning phrase, the Strategic Defence Review Liaison Team assessors found almost unanimous suspicion that the review is a "cost-cutting exercise dressed up in policy rhetoric".
This suspicion is fuelled by fears that the Treasury will dictate the final result of the review, whatever the MoD's wishes, and by the announcement last year of a pounds 168m "raid" on the services to help fund the NHS, the Liaison Team assessment says.
The findings will come as a blow to ministers, who announced the review last year as an attempt to lay down the role of the Services in a post Cold War era. It was felt necessary in spite of two very recent reviews under the Tories, Options for Change in 1990 and Frontline First four years later.
Writing in The Independent last July, Mr Robertson warned against the "isolationism" that would follow from further deep cuts in the services. Britain's spending on defence has fallen by nearly a quarter in real terms since1990, and the size of the Army has been slashed by a third.
While accepting the need for value for money, and ruling out increased spending, Mr Roberston insisted Britain needed "flexible, mobile, hi-tech armed forces" to face the 21st century.
What is clear from the documents seen by The Independent is that military personnel from all ranks simply do not believe the Government's pledge that the review is about policy rather saving money.
Moreover, a large exodus of skilled, experienced staff could lead to what some have described as huge "expertise gaps" in the Royal Navy, Army and Royal Air Force.
The Liaison Team's assessment of morale reveals that a lack of internal information through the usual routes - the chain of command - is a major factor in undermining good will for the changes, and has led to widespread cynicism.
Many complain that the MoD does not have the interests of its staff at heart, and that life in the Services is no longer a career but "just another job". As a result, the assessment says, "many are questioning whether or not to remain".
Other complants from the military are over the civilianisation of many jobs, the new business ethos, too much rigid bureacracy and a sense that the headquarters and command structures are "too fat" compared with the leanness of front-line services.
Staff are predominantly concerned about their conditions of service, though interestingly, not so much about pay as their working conditions. They feel money should be spent on improving those conditions rather than on new military hardware.
In his summary of the Liaison Team's asssessment, Mr Day says the tone of the soldiers' views is not surprising, as they are taking up a chance to air grievances. He argues that much of the criticism could be short- lived - so long as the review is seen to address their points.
Tellingly, however, Mr Day's report says there is a limit to what can be achieved in improving internal PR. "We will not be able to reassure more personnel about the outcome of the review," it says.
But more could be done to stress the policy-driven nature of the process, and to highlight ministers' determination to deal with shortfalls in military capacity "inherited" from previous administrations. Mr Day suggests the Secretary of State might want to review how this could be done.
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