The UK’s armed forces are suffering from “significant” levels of understaffing in key areas as they struggle to recruit and retain employees, the government spending watchdog has warned.

The National Audit Office (NAO) said the number of full-time staff in the military is at its lowest level in 10 years and well below current requirements.

The shortfall comes amid record-low levels of satisfaction with working conditions in the military. Morale over issues such as pay and accommodation has dropped since 2010, the NAO said.

As a result, the watchdog warned, there are now 102 specialist areas in which there are not enough full-time staff to meet current needs unless leave or training is cancelled.

Staffing levels in the armed forces are currently 5.7 per cent below requirements – the equivalent of 8,200 employees.

According to the NAO, the Ministry of Defence “has not established effective authority” to resolve the problems.

Amyas Morse, head of the NAO, said: “Ensuring the armed forces have the right number of skilled personnel in place is not a new challenge, but given the complexity and development of new, modern world threats, it is a challenge that will only continue to grow.

“The department needs to fundamentally change its approach to develop skilled personnel and address the long established shortfalls that persist.”

The NAO said the shortfall stems from a failure to effectively recruit staff and retain existing employees.

The proportion of full-time employees leaving each year increased from 3.8 per cent in March 2010 to 5.6 per cent in December 2017.

Around 7,500 military employees left the armed forces last year, and 24 per cent fewer staff than planned were recruited, the NAO said.

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The skills shortfall has worsened in the past year and is likely to continue to do so as increasingly specialist employees are required to deal with new threats such as cyberattacks.

Of the 102 areas with skills gaps, the Ministry of Defence predicts it will fill just six in the next five years, while the problem will worsen in 23 areas.

The shortfall was particularly severe in six areas: engineering, intelligence, logistics, pilots, communications and medical. This includes a lack of 2,400 engineers, 800 pilots and 700 intelligence analysts.

Labour said the report showed the armed forces are being “badly let down” by a lack of government investment.

Nia Griffith, the shadow defence secretary, said: “This report exposes the crisis in recruitment and retention that has developed on this government’s watch.

“Our servicemen and women are vital to our national security but they are being badly let down by the government’s complete failure to invest in personnel to staff defence equipment, leading to a knock-on impact on morale.

“Armed forces personnel have now faced seven years of real terms pay cuts, and satisfaction with pay and service life is in complete free fall. It is high time for the government to take concrete action to address this crisis, and agree to lift the public sector pay cap to give our personnel the pay rise that they deserve.”

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A Ministry of Defence spokesperson said: “Recruiting and retaining talent is one of our top priorities and we have a range of schemes, including retention pay for and direct entry into specialist trades, and flexible working to make sure we attract and keep the skilled personnel we need.