The number of senior military officers could be cut as part of efforts to rein in costs at the Ministry of Defence, Liam Fox suggested today.
The Ministry of Defence faces cuts to its backroom operations to ensure frontline troops get everything they need, Liam Fox said today.
The Defence Secretary indicated that numbers of senior military officers and civil servants would be reduced to help tackle the £37 billion black hole in the department's finances.
Launching a wide-ranging reform of how the MoD is run, he said the ministry had to be "leaner", less centralised and more transparent.
Dr Fox said he was reminded while visiting Afghanistan this week that supporting British forces on operations had to take priority over spending on staff in Whitehall.
He said: "It brought home to me once again that the prime purpose of what we are doing is to make sure that our Armed Forces on the frontline have everything they need, and all the support they require, to carry out their mission successfully and safely.
"That means that the backroom sometimes has to do without to make sure that the frontline gets what it wants."
Giving a speech in London, Dr Fox said the "ghastly truth" was that financial mismanagement by Labour had left the MoD with an "unfunded liability" of £37 billion over the next 10 years.
The ongoing strategic defence and security review (SDSR) must "put the Cold War to bed" and concentrate on future dangers to the UK rather than the threats of the past, he said.
In the modern world the "moral climate" demands precision weapons and battles are increasingly waged in cyberspace and using unmanned vehicles like aerial drones, he added.
Dr Fox said alongside the review his department would be restructured and decentralised, with top brass given more control over running their own services.
He ruled out any merger of the Royal Navy, Army and RAF 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."
The Defence Secretary set out plans today to reorganise the MoD into three pillars: policy and strategy, the Armed Forces, and procurement and estates.
There will also need to be a "cultural shift which will see a leaner and less centralised organisation combined with devolved processes which carry greater accountability and transparency", he said.
Dr Fox announced the formation of a Defence Reform Unit under Lord Levene to guide the "hard thinking" and complement the SDSR.
He admitted the process of reducing costs would "not be painless" but refused to say how many MoD civil servants would be cut.
He said: "I'm not beginning from that premise. I'm beginning from the premise that we set out the structures we will need in the long term, and then we will make the changes we require to get there.
"It will not mean equal changes across the system. Some parts of the organisation I think work better than others, I think some parts of the Armed Forces work better than others.
"It will be a root and branch reform."
He added: "This needs to be the defence review that puts the Cold War to bed. This needs to be the defence review that changes the way Britain looks at the world around it ...
"What this is about is shaping Britain for the 21st century, and that is the big cultural shift which I think underpins every bit of thinking of the review that we're undertaking."
The MoD faces having its £36.9 billion annual budget slashed by between 10% and 20% as part of massive Whitehall funding cuts ordered by the coalition.
The SDSR is looking at all options as it assesses Britain's future defence needs, apart from the question of whether to replace the Trident nuclear deterrent, which is already a Government commitment.
The Royal Navy, Army and RAF are set to see personnel numbers reduced and equipment projects axed as a result of the review.
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 RAF could shrink to its smallest size since the First World War.
Chancellor George Osborne made it clear last month that the full £20 billion cost of renewing Trident must be paid for out of the defence budget. Previously it was funded directly by the Treasury.
Asked about the MoD's ability to pay for Trident in the light of the Chancellor's comments, Dr Fox said today: "How that budget is funded to take account of that is a conversation that is constantly ongoing with the Treasury."
The results of the SDSR will be announced at the end of October.