Labour has alleged that multi-billion pound defence procurement projects, such as the two new aircraft carriers, would be “put in jeopardy” by the Conservatives' proposed efficiency savings.

Geoff Hoon, the defence secretary, has accused the Tories of proposing “cuts that could weaken our efforts in the war on terror”.

His attack is predicated on the fact the Tories intend to rationalise procurement and logistics spending, saving £900m more than Labour by 2008, in part to fund a £2.7bn increase in front-line defence spending compared with Labour.

Mr Hoon argued this plan meant the Tories would be committed to high spending on troops and frontline support. If as the defence secretary asserted a Conservative government were unable to make its assumed savings, it would have to cut back on procurement to make the books balance.

The Tories rejected the Labour sums, claiming their proposed savings were achievable and counter-attacked by accusing the government of having undermined the armed forces' capability and effectiveness.

The latest bout in this week's political trench warfare over tax and spending will concern defence companies, given that both parties plan to save significant amounts on procurement, to help reduce waste at the Ministry of Defence.

Mr Hoon used a speech to the Royal United Services Institute to attack the Tory plans as “for the birds lacking any kind of serious or believable content”. The defence secretary said that Labour's proposed Gershon savings of £2.8bn by 2007-08 about 8 per cent of its planned £33.3bn defence spending were “impressive by anyone's standards” and would put great pressure on civil servants to achieve.

The Tory plans for an additional £1.6bn of efficiency savings by 2008, which would help to fund an overall increase in defence spending, meant “16 per cent of the defence budget [will come] from saving paper-clips,” Mr Hoon said. “It really is fantasy politics.” He claimed the scale of the Tory savings meant procurement projects, such as the aircraft carriers or Typhoon aircraft, could be jeopardised.

The Conservatives rejected this. The Tories highlighted the MoD's poor procurement record, with “equipment in service late and over cost,” to support their contention there was greater scope for savings.

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