Liam Fox: Labour acted like out-of-control online shoppers over defence

The Defence Secretary sought to rally the Tory faithful behind him in his battle with Chancellor George Osborne over the military budget.

Highlighting the threats from countries such as Iran, terror groups and piracy on the high seas, he said: "The country's finances are wrecked and the world is more dangerous than at any other time in recent memory. Never has a defence review been carried out under such extreme circumstances."

In his speech at the Conservative rally in Birmingham, he also launched a stinging attack on his Labour predecessors — accusing them of behaving like "out-of-control online shoppers".

He emphasised that he had inherited unfunded liabilities at the Ministry of Defence of about £38 billion over the next 10 years as the costs of equipment programmes spiralled out of control and suffered delays.

"We must confront the ghastly truth of Labour's legacy," he said. "They behaved like out-of-control online shoppers who kept ordering more and more without once considering how they might pay for them when the goods arrived.

"The price of this irresponsibility will ultimately be paid for by reductions as we try to return defence to a sound footing." Mr Fox is seeking to limit cuts in the MoD's £37 billion budget to close to 10 per cent or below but even this could see the scrapping of plans to build one of two aircraft carriers at a joint cost of £5 billion. To highlight the scale of the economic crisis, the Defence Secretary stressed that the UK was due to pay £46 billion on its debts next year.

"This would be enough to purchase an extra four aircraft carriers, 10 destroyers, 50 C17 cargo planes, 300 Chinook helicopters, fund 13,000 extra soldiers and still have enough left over to revolutionise forces' accommodation," he said.

Mr Fox sees David Cameron and Foreign Secretary William Hague as key allies in his clash with the Treasury over the strategic defence and security review. Mr Hague, though, stopped short of backing defence spending of at least two per cent of national income.

The Defence Secretary also announced more support for soldiers and veterans with mental health problems, including a 24-hour helpline and 30 specialist nurses to tackle the "national scandal" of post-conflict suicides.