General advances on Chequers

Britain's most senior soldier, General Sir Michael Walker, called on the Prime Minister at Chequers yesterday to try to save the armed forces from a further round of savage cuts demanded by the Chancellor, Gordon Brown.

Only hours before the Chancellor's statement was due to go to the printers, the Ministry of Defence had still not settled a final figure for this year's defence budget.

Service chiefs say they have been shocked by a new set of cuts, which they claim were demanded by Mr Brown ahead of this week's comprehensive spending review.

"We thought we had made all the cuts in line with the Treasury's initial demands," said a Whitehall source. "Then ... we were faced with a new set of figures from the Treasury which made no sense."

As Chief of the Defence Staff, General Walker can demand a personal interview with the Prime Minister any time he believes issues affecting the security of the realm are at stake. In the past, chiefs have persuaded Tony Blair to find extra money to support the services' current operations.

Budget proposals drawn up by John Dods, the senior Treasury official in charge of defence spending, demand a cut of about £1.5bn, full payment from MoD funds of commitments in Iraq, and a culling of between 15,000 and 20,000 personnel from the three services.

No suggestions have been made of equivalent redundancies among MoD civil servants, who are now a bigger force than the Army.

"We are now in a completely absurd position," a senior defence official said last week. "We have no final settlement, and it looks as if we will have to have a full-blown defence review."

Geoff Hoon, the Secretary of State for Defence, was due to announce the defence cuts and restructuring of the armed forces on 21 July along the lines of Mr Brown's original proposals.

"It's hard to see what Geoff Hoon can announce ... in view of the latest demands by the Treasury," said an official.