National Secretary Steve Jary said: “The report accurately describes the malaise afflicting the department – especially its conspiracy of optimism identified as responsible for overspends and delays that have left MOD facing a £38bn financial black hole.

“Prospect has long warned that inter-service rivalry and the dominant position of military decision makers has helped create the present crisis in defence funding.”

The union warns that Defence Secretary Dr Liam Fox’s prescription to devolve more power to service chiefs and to cut MOD specialist civil servants by one third is a recipe for disaster, because civil service specialists are the bulwark between the wildest fantasies of service chiefs and the taxpayer.

Jary said the political imperative to cut 25,000 MOD civil servants will mean a greater proportion of programme managers will have to be military officers, the very people criticised by the PAC for only being in post for short periods and therefore not fully accountable for the lifetime of a particular project.

”We urge Dr Fox to think again because his medicine is likely to kill the patient.”