DEFENCE chiefs are "grossly under-funding" Britain's armed forces by at least £1bn, a powerful committee of MPs will reveal next week.
Aftermath: an Iraqi police officer patrols the streets following the clashes with the Soldiers of Heaven cult
As a result, our armed forces are under-manned, over-stretched and, in many cases, not ready for the battlefield, potentially putting lives at risk, MPs will declare following a year-long inquiry.
The shortfall in funding could mean crucial new defence contracts, from the construction of aircraft carriers to armoured vehicles for Iraq, will be delayed or cancelled altogether, MPs on the Defence Select Committee warn.
Last night, there were fears that the crisis could have a knock-on effect for the hundreds of jobs in Scotland which rely on defence contracts for work.
The report will pile extra pressure on Defence Secretary Des Browne as he faces claims from former defence chiefs that the Government has broken the 'military covenant'.
The report will lay bare a catalogue of shortfalls within the MoD, including:
• Analysis revealing that the MoD spending plans are around £350m a year less than is required over the next three years.
• Evidence that only 58% of the armed forces had no "serious or critical" weaknesses in their ability to mount operations, well beneath the target of 71%.
MoD chiefs have admitted to the committee that this is caused by "existing high levels of deployment" in Afghanistan and Iraq.
• The failure to meet force targets in the Army. The "predicted trained strength" for this April is 99,300, as opposed to the target of 101,855.
The committee has taken evidence from the MoD's most senior staff who now admit openly that the financial pressures will hurt.
The MoD's permanent secretary Bill Jeffrey is recorded as saying: "We will certainly be looking at the equipment programme.
"My guess is that we will have to make some quite difficult decisions."
Union leaders say delays to a £4bn order for two Royal Navy aircraft carriers could put jobs at risk at Govan and Scotstoun shipyards in Glasgow, and at Rosyth, Fife.
Bernard Jenkin, a Conservative member of the cross-party committee, said it was inevitable that the financial strain on the MoD would lead to major orders being delayed, scaled back or scrapped altogether.
"The MoD is going to have to cut back on its programme of procurement projects in order to carry on with its frontline commitments in Iraq and Afghanistan," said Jenkin.
Jim Moohan, chairman of the Scottish ship-building and engineering unions, said the aircraft carrier order was crucial to the future of BAE Systems' 2,500 workers at Govan and Scotstoun and the 1,000 staff at Babcock International at Rosyth.
The work will secure jobs and apprenticeships for the next ten to 15 years, said Moohan.
He added: "Any slippage could take us to the edge of extinction. After 20 years of instability, I don't understand why the Government would risk the backlash involved in failing to save the industry."
Defence ministers say the defence budget will increase by 1.5% over the next three years from £34bn in 2008/09 to £36.9bn in 2010/11.
But Jenkin confirmed analysis shown to the committee suggested that the MoD was facing an annual shortfall of £1bn.
"Anyone reading this report will draw the clear implication that the armed forces are grossly under-funded," he said.
He added: "It's evident in the continuing under-manning of all three services, in a decline in our forces readiness for operations, in the need to replace equipment that has worn out in the field and in the need for troops to be able to train on the same equipment that they will use in the field."
An MoD spokeswoman said the UK's defence budget was the second-highest defence budget in the world in real terms and represented the longest period of sustained real growth in planned defence spending since the 1980s.
"It is evidence of the Government's commitment to defence and to the men and women who serve with the utmost bravery in our armed forces," said the spokeswoman.
She added: "The MoD is currently in the middle of its planning round, when it considers a very wide range of options as a matter of course.
"This is routine business, and no decisions have been taken. But inevitably there is always a lot of speculation."
The full article contains 729 words and appears in Scotland On Sunday newspaper.
