By Ben Farmer, Defence Correspondent

Telegraph Online – 12 January 2018

Theresa May personally rejected "horrific" proposals for cuts to fill the defence budget black hole, it has been disclosed, but has been warned of a Tory rebellion unless she fixes the Armed Forces funding crisis. Cost-cutting options proposed as the Ministry of Defence tries to find £20bn of savings amid a wider Whitehall security review would have seen 11,000 axed from the Army and 2,000 cut from the Royal Marines.

The leaked proposals described as "horrific" and "ugly, ugly and ugly" were blocked before Christmas by the new Defence Secretary, Gavin Williamson, and Mrs May, who both decided they were politically unacceptable. But defence sources and MPs warned the three suggested packages of cuts laid bare the scale of possible reductions still hanging over the forces unless more money is found.

The three proposals included cutting up to seven Royal Navy frigates and as many as 100 helicopters, and merging parts of 3 Commando Brigade and 16 Air Assault Brigade. The security capability review led by National Security Adviser Mark Sedwill had been due to report back before Christmas.

Mr Williamson is understood to have won more time as he tries to persuade the Treasury that defence needs up to £2bn a year extra investment to deal with growing threats and rising equipment costs. The Government is expected to announce as early as next week that the defence part of the review will now be postponed until later in the year. One Whitehall source said:

"He said there's no way I'm doing any of these things, we need to think again. He's won a bit of breathing space, but it's only a baby step".

Downing Street dismissed the cuts proposals as speculation, though officials launched an extensive leak hunt inside the Ministry of Defence. The Prime Minister's spokesman said the Government was

"committed to maintaining the overall size of the Armed Forces".

But MPs said that without money, Number 10's assurances

"don't mean anything".

Johnny Mercer MP said there were up to 50 MPs in the Commons who were prepared to fight against cuts. He told the Telegraph:

"I have a cohort of MPs who are not prepared to see these proposals go through. There will be a lot of business that the Government wants to get through that requires a full turnout of Tory MPs. A number of us would be prepared to stop that unless defence is sorted out. It's not about threats or rebellions. We are the party of defence and it's about making that a reality again."

Julian Lewis MP, chairman of the Commons Defence Committee, said:

"The fact that these options have to be put shows how grotesquely underfunded defence has become."

He said the review process had become a shambles, with strategic defence decisions take out of the hands of military chiefs and controlled by Cabinet Office civil servants. He said:

"It is this melding together, this mishmash, of the military, the security and the civilian roles that is undermining what we need, which is a clear-headed and systematic approach to the strategic challenges facing this country."

Any new cuts will follow decades of reductions which have been accused of leaving the Armed Forces not fit for purpose and at risk of "institutional failure". General Sir Richard Barrons, the former head of Joint Forces Command until 2016, told MPs before Christmas that the defence establishment is "close to breaking" and without more money "will fall over".