LONDON, April 8 (Reuters) - Britain, fighting in Afghanistan and flying sorties over Libya, has plugged a one billion pound ($1.6 billion) gap in its defence budget this year, government sources said on Friday.
The settlement between the Ministry of Defence and the Treasury will prevent further big reductions in manpower and equipment in 2011.
However, Foreign Secretary William Hague dismissed talk the Libyan conflict would prompt a wholesale revision of cuts in defence spending outlined last year.
A shortfall has been averted by delaying some spending and drawing on an existing Treasury reserve fund for operations in Afghanistan, rather than making more cash available.
The Daily Telegraph newspaper said because of the Libyan conflict, Prime Minister David Cameron was 'actively engaged' in a more fundamental reassessment of planned defence cuts.
It was not too late to reverse a decision to cut the number of RAF Tornado fighters and to scrap surveillance planes, the Telegraph said, adding some Royal Navy frigates could also be spared.
But, Hague distance himself from the report.
'The major decisions of the defence review stand and are being vindicated by the fact that we are able to do what we are doing in Afghanistan and conduct this operation in Libya at the same time,' he added.
Defence analysts say Britain will ultimately have to choose between a high profile military and diplomatic role and tighter spending, with deeper cuts in other sensitive areas needed if the country is to maintain its present commitments.
The head of the RAF warned this week the service risked becoming overstretched without more investment in coming years. Air Chief Marshal Stephen Dalton said the RAF was preparing to conduct operations over Libya for at least six months.
'STICKING PLASTER'
Under the terms of the Strategic Defence and Security Review (SDSR) announced last October, defence spending is to fall around 8 percent over the next four years.
That reduction compares favourably with a 19 percent average reduction across all departments as the government makes unprecedented spending cuts to tackle its budget deficit.
The Ministry of Defence (MoD) confirmed it had settled its budget for 2011 and would provide details when parliament returns later this month after an Easter break.
'The MoD has concluded its Planning Round for 2011 -- the annual budget review to ensure commitments match resources,' it said in a statement.
Defence analyst Mike Dewar described the settlement for 2011 as a 'sticking plaster' solution.
'It's avoiding, most important of all, political embarrassment for the government when we have our troops deployed in Afghanistan and aircraft in Libya,' Dewar told the BBC.
But longer-term questions remained unresolved, he said.
'Should we have a bigger defence budget or should we drop some of the international responsibilities we have taken on recently?' he added.
(Editing by Sophie Hares) ($1=.6137 Pound) Keywords: BRITAIN DEFENCE/ (keith.weir@thomsonreuters.com, 00 44 20 7542 8022; Reuters Messaging: keith.weir.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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