Rifkind squeezes budget as peace dividend falls short: Christopher Bellamy and Colin Brown look at factors leading to cuts in the armed forces' back-up services, which were announced yesterday.

MALCOLM RIFKIND, the Secretary of State for Defence, was last night accused of bowing to Treasury pressure in swinging the axe again at the pounds 23bn defence budget.

'The cuts are Treasury led. There is still no sign of any strategic review,' Menzies Campbell, the Liberal Democrat defence spokesman, said.

But Mr Rifkind's supporters said the Defence Cost Study - called Front Line First - would sharpen the teeth of the armed forces at the expense of the tail.

Ministers accept that the so-called 'peace dividend' which followed the collapse of the Warsaw Pact has been short-lived. Options for Change delivered cuts of more than pounds 1bn with deep reductions in the numbers of troops and led to campaigns to save famous regiments.

Mr Rifkind warned colleagues that cuts of that magnitude in the front line could not continue without risking Britain's defence capability. He resisted a full-scale review of defence, which could have raised questions over the remaining British Army on the Rhine. Under pressure from the Treasury to find more savings, he targeted the support services.

City-centre recruiting offices - vulnerable to terrorist attack - will be replaced by mobile recruitment units; between 13 and 19 generals, admirals and air marshals will be retired, and up to 24 Ministry of Defence top civil servants will go. Firing ammunition live will be reduced, and replaced with more use of simulations and computer models.

Two defence ministers, Jeremy Hanley and Jonathan Aitken, who is tipped for promotion to the Cabinet, carried out the detailed review of back-up services, from MoD permanent under-secretaries to Royal Navy dental hygienists. They believe the cuts will be justified, providing they can turn the savings into spending on new fighting equipment in the front line.

The ending of the Cold War, and increased instability in the world, has left Britain with new demands out of the traditional Nato area, requiring forces capable of deployment in the Middle East or further afield. Mr Rifkind is planning a new hard-hitting joint rapid deployment force of 20,000 men combining tough units, such as the Special Air Service and the three Royal Marines' commando units under one command.

The Royal Air Force is expected to be hardest hit, taking about half the service job cuts. In order to 'sweeten' the bitter pill a number of big equipment orders will be confirmed, though they are expected to be orders to which the Government has already committed itself in some form.

Military chiefs regard the closure of the Royal Navy base at Rosyth as long overdue. It was a hang-over from the Cold War threat to Nato's North Atlantic sea lanes.

The Government is committed to replacing the two amphibious assault ships for the Royal Marines, Fearless and Intrepid, but no order has yet been placed, so a firm order is one possible 'sweetener'. A commando helicopter carrier, ordered last year, is being built by Kvaerner Govan on the Clyde and is to be fitted out by Vickers Shipbuilding and Engineering in Barrow, Cumbria, which also builds submarines.

The Government is also committed to three more Type-23 frigates and to maintaining the number of minehunters, of which five are already in service at 25. That gives scope for more new Sandown-class minehunters of which five are already in service. Type-23s have been built by Yarrow, on the Clyde, but could also be built by Vosper Thornycroft in Southampton.

Swan Hunter, currently in receivership, hopes to get the refit of the Royal Fleet Auxiliary Sir Bedivere. It hopes to be taken over by CMN, a French company, but CMN is expected to pull out if Swan Hunter does not get the Sir Bedivere refit.

One 'sweetener' which has been delayed until after the recess is an announcement on a replacement for the RAF's ageing fleet of 60 Hercules transport planes. A modern version of the Hercules, the Lockheed C-130J is available now, and 23 British firms, including Westlands, are involved in the project.

But British Aerospace is part of European consortium, Euroflag, which plans to build a bigger plane, the Future Large Aircraft, using Airbus technology, which would be available in about 2004. It fears that if the Government goes for an order of C-130Js now it will preclude British involvement in the FLA programme, although from a military viewpoint a mixed fleet of C-130Js to be augmented by FLAs when they became available would make sense, and would also preserve jobs now.