The UK’s defence budget does not exist to “subsidise the defence industry”, the country's most senior military officer has warned.
General Sir Nicholas Houghton, the chief of the Defence Staff, said that while the future budget for the forces equipment programme was guaranteed by ministers, military manpower was increasingly seen as an "overhead".
Speaking to the Royal United Services Institute military think tank, he suggested that decisions on armed forces spending had too often been taken "with an eye on supporting the United Kingdom's defence-industrial base" and called for a programme of "balanced investment" in manpower and equipment.
"We must be careful that the defence budget is not disproportionately used to support British defence industry," he said. "There is a strong strategic case to retain specific sovereign capabilities in national hands. But the defence budget does not exist primarily to subsidise the defence industry or promote defence exports. It exists to maximise defence capability."
While limited resources had increasingly been channelled into "large capital equipment programmes", the forces had been left "critically deficient" in key capabilities such as intelligence, surveillance, communications, logistics and tactical transport.
Houghton warned that Britain is in danger of being left with hollowed-out armed forces, with "exquisite" equipment but without the soldiers, sailors and airmen needed to man it.
"While exquisite technology has been protected as the key to operational superiority, manpower has been seen as more of an overhead. Activity levels and training has been squeezed," he said.
"The one bit of defence's future funding that has political commitment to real growth is the equipment programme but the dawning reality is that even if we maintain the non-equipment budget in real terms, rising manpower costs raise the prospect of further manpower and activity cuts in the future.
"Unattended, our current course leads to a strategically incoherent force structure – exquisite equipment, but insufficient resources to man that equipment or train. It is what the Americans call the spectre of the 'hollow force'.
"We are not there yet, but across defence I would identify the Royal Navy as being perilously close to its critical mass in manpower terms."
In a wide-ranging speech, Houghton called also for a re-evaluation of Britain's homeland security, with the potential for a state-sponsored terror or cyber attack to alter "many of our calculations about the security of the United Kingdom in the years to come”.