Philip Hammond MP

The Ministry of Defence is to cut 25% of its head office staff, Philip Hammond revealed today.

The Defence Secretary also announced a new senior structure in the department, to allow it become less "top heavy". An MoD statement said the move would save around £3.8m a year.

About 26 civilian and military posts at Senior Civil Service level, equivalent of Commodore, Brigadier, Air Commodore or above are set to go, the MoD said. Mr Hammond said:

"At a time when we are making difficult decisions about Defence spending and have had to accept reductions across the board we cannot ignore the volume of posts at the top. For too long the MoD has been top heavy, with too many senior civilians and military."

The Ministry of Defence has eliminated the "yawning black hole" it inherited in its finances and delivered a balanced budget, Defence Secretary Philip Hammond has announced.

Speaking in the House of Commons, Mr Hammond said his department had taken "tough decisions" to deal with the "chaotic" budget deficit, and pledged to ensure that the MoD “never again gets into the mess it did in early 2010.”

The Defence Secretary said the U-turn on aircraft carrier jets, announced last week, was "the final piece of the jigsaw” in creating a "formidable, adaptable and well equipped Armed Forces backed by balanced budget, disciplined processes and an efficient and effective department."

"The best way I can support our Armed Forces," he said, "as they restructure and refocus themselves for the future, is to give them the assurance of stable and well-managed budgets and the confidence that the equipment programme is affordable and deliverable.

"The only way to ensure in the long term, the ability to project power to protect our national security and to ensure that our troops have the equipment they need is to have defence budget that is in balance."

The Defence Secretary also denied he was planning to scrap historical regimental names such as Black Watch, saying he understood the "vital role" the regimental structure plays in the Armed Forces.

However he refused to rule out any further amalgamation or disbandment of Scottish regiments.

"We are going to have a smaller army, "he said.

"You can’t have a smaller army without some structural changes, and I will make an announcement to the House as soon as I am able about the structure of Army 2020."

Those who borrowed too much during the economic boom must take responsibility for their involvement in the financial crisis, Philip Hammond has said. Speaking to the Daily Telegraph, the Defence Secretary said consumers and home-owners who took out loans, spent large amounts of money on credit cards and accepted large mortgages were "consenting adults" and that banks "had to lend to someone".