Dr Fox wrote the letter before the National Security Council meeting on Tuesday Defence Secretary Liam Fox has warned the prime minister that “draconian” spending cuts while the UK is at war will result in “grave consequences”.
In a private letter to David Cameron leaked to the Daily Telegraph, he said he would refuse to back any substantial cuts to the armed forces.
Dr Fox said cuts would risk seriously damaging the morale of troops and the reputation of the Conservative Party.
He said he was “appalled” by the leak and the culprit would be found.
In the letter to Mr Cameron leaked to the Daily Telegraph he said: “Party, media, military and the international reaction will be brutal if we do not recognise the dangers and continue to push for such draconian cuts at a time when we are at war.”
He suggested the Tories could destroy “much of the reputation and capital” they had accrued on defence.
If cuts go ahead, he warns, the “range of operations that we can do today we will simply not be able to do in the future”.
The letter was written ahead of Tuesday’s meeting of the National Security Council, where defence chiefs, the prime minister and the defence secretary considered the options for the strategic defence and security review (SDSR).
Dr Fox expressed concern that the process was looking more like a spending review than a strategic review.
“Frankly this process is looking less and less defensible as a proper SDSR and more like a ‘super CSR’ (Comprehensive Spending Review),” he wrote.
The BBC’s Caroline Wyatt said the leak was damaging and one which made clear the tensions and divisions over the defence review.
“I am utterly appalled by this breach of trust and have ordered a full investigation to find out how it happened”
Dr Liam Fox Defence Secretary
She said Downing Street was playing down the letter, saying it was natural for a defence secretary to make “robust representations” about his department’s budget.
Dr Fox described the leak as “totally unacceptable”.
“It is entirely normal that ministers should make representations to the prime minister during the strategic defence and security review and the Comprehensive Spending Review. That is an entirely proper part of the process of government,” he said.
The prime minister is fully entitled to expect those representations are “made in private and kept private,” he said.
“I am extremely angry this confidential communication has been made public,” he added.
“I am utterly appalled by this breach of trust and have ordered a full investigation to find out how it happened. We will stop at nothing to ensure that the culprit is found.”
The National Security Council did not make any final decisions on Tuesday, and it is due to meet again after the Tory conference next week, with the review due to report in October.
At the meeting, the prime minister said the review needed to be driven by strategy, not just spending.
The review began after the general election. The last review, in 1998, took more than a year.
It is designed to look at the UK’s role in the world, evolving threats to the country’s interests, the nature of the UK’s response to such threats and whether the armed forces are equipped to deal with future challenges.
Annual defence spending in the UK currently stands at about £37bn, which is around 2.5% of GDP. Cuts of 10-20% are expected as part of the government’s austerity measures to reduce public spending.
Speculation on possible cuts has ranged from the scrapping of new aircraft carriers to grounding the RAF’s entire fleet of more than 70 Tornado jets years earlier than planned.
On Monday, Foreign Secretary William Hague said the defence budget – over-committed by £38bn over the next decade – must be dealt with.
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