Mr Osborne told the BBC's Andrew Marr Show yesterday: "I have settled the defence department, which people always thought was going to be one of the biggest and most difficult challenges." He added that Mr Hammond will have to make "some tough choices" and cut the number of civilians working for the MoD while renegotiating big contracts. But he insisted: "We're not going to reduce the number of soldiers, sailors, airmen. In fact we're actually going to be able to spend some money on things like cyber, which is the new frontier in defence."