Leading article: Britain must learn to live with the defences it can afford

The Government kept up the frenetic pace of its early initiatives with an announcement by the Defence Secretary, Liam Fox, of a thorough-going review of how the Ministry of Defence is run.

This is in addition to the Strategic Defence and Security Review already in progress and is designed to produce a leaner, less centralised organisation. From what Dr Fox said, both reviews are taking a root-and-branch approach in which nothing, including sacrosanct projects and the swollen ranks of the top brass, is spared.

In many ways this is positive. Dr Fox stated that, as a Conservative, he had not come into politics wishing to see a reduction in our defence budget; nor had David Cameron. But the state of the economy had forced their hand. Here we have the uncommon sight of a Conservative Defence Secretary hell-bent on implementing defence cuts. And if the intention, at the same time, is to rethink and rationalise Britain's defence sector in line with what the country can afford, that marks a welcome return to realism.

A Conservative-led government has an advantage over its Labour predecessor in reviewing defence spending. It feels no need to prove its defence credentials, as New Labour clearly did, which means that it should be less diffident about acting on, as well as commissioning, a probably unpopular report. Some hard lessons have also been learnt from the Blair government's multiple military interventions, which – as the Iraq Inquiry has heard – left the armed forces at times perilously overstretched. There are implications here for political decision-making, but also for the way in which the armed forces are structured and equipped.

Two aspects of the defence reviews are particularly welcome. One is Dr Fox's determination to resist the pressure from service chiefs to spread the pain. Risks, costs and capabilities are all being included in the equation. That is how defence budgets should be devised. The other is his bald statement yesterday that senior ranks will not be exempt from pruning. The British defence establishment has, over the years, become top-heavy compared with its alliance counterparts and far more dependent on civilian support. The ratio of combat-ready troops to others is also conspicuously small. As Dr Fox noted yesterday, it takes our armed forces of over 180,000 to sustain a combat force of under 10,000 in Afghanistan. This is clearly unsustainable.

All that said, the Defence Secretary's real battles will begin only when the review recommendations are known. The top brass and the Ministry of Defence have a long and distinguished record of resisting change, especially when cherished programmes and promotions are under threat. The Government's deficit-cutting ardour will be sorely tested.

It is also disingenuous for Dr Fox to imply that anything and everything is on the table. Something is being spared, or at least not included in the SDSR, and that is the Trident nuclear deterrent. Calling its renewal into question could free more than half the defence budget for other purposes. Dr Fox is said to be in dispute with the Treasury about whose accounting column Trident appears in, but the debate, described as ongoing, is being conducted behind the scenes. Like the SDSR and the organisational review announced yesterday, it should be out in the open.