The Ministry of Defence has halted all spending for two months after its budget spiralled out of control.
The freeze began at the start of this month and will last until the end of March. It is causing worry over long-planned projects that need approval before the next financial year.
The prices in defence contracts have been pushed up by inflation since the budget was set and last autumn’s Armed Forces pay rise was funded by the MoD capital budget.
Both of these are believed to have contributed to the need for the spending halt, which has caused alarm throughout the department.
A defence source who has seen the impact first-hand told The Telegraph: “There is an almighty scramble going on. It is absolute chaos.”
One area potentially impacted is the UK’s involvement in Project Convergence, a gathering of allied nations in California this spring to test military innovations. There has reportedly been discussion about reducing the UK’s presence at the event.
Other projects have also been affected, being left in limbo after months of discussion.
Sources who have worked inside the MoD over the past decade said they could not remember any similar freeze on new capital spending.
And there is currently no indication that the Chancellor will include more defence spending in the Budget on March 6, despite it increasing last year.
But there were signs of budgetary pressure last year when defence officials were told that only essential travel could be expensed and internal catering for meetings would be scaled back.
Former Tory defence secretaries also raised concerns about the freeze to the Telegraph.
Sir Gavin Williamson said: “No one is in any doubt at the moment that what we do need to see is a major investment in the military.
“Having to delay that and put projects off is an enormous problem. Britain’s adversaries are watching. This is a constraint at exactly the worst possible time.”
Ben Wallace said: “All the warning lights are flashing red across the world as the prospect of conflict is increasing. Now is not the time for the Treasury or the Government to be dancing around this most vital duty of leadership.
“Defence needs a sustainable long-term increase in spending. No party should sweep defence under the election rug.”
A Ministry of Defence spokesman said: “We do not recognise these claims. As we have done previously, we continue to review capital-related activity for the remainder of the financial year as part of effective financial management to ensure the department lives within its allocated funding.
“We are spending more than £50billion a year in cash terms on our Armed Forces, supporting global deployments and continuing to invest in new tanks, fighter jets and warships.”
