In a Daily Telegraph interview, Mr Osborne blames the previous Labour government for what he calls the "horrendous" situation at the MoD. The remarks follow a disagreement between Prime Minister David Cameron and Defence Secretary Liam Fox over plans to cut defence spending.

Mr Cameron has said his defence secretary's fears are "unfounded".
'Contract bound' Mr Osborne said defence was the "most chaotic, most disorganised, most over-committed" budget he had seen.
He told the Telegraph: "We are going to have a bunch of kit that makes us extremely well prepared to fight the Russians on the north German plain. That's not a war we are likely to face."
The chancellor said there was little the coalition could do about the situation.
"We are bound into contracts and that's just a fact of life," he said.
BBC political correspondent Mike Sergeant says the chancellor has entered this increasingly tense debate, but at the same time making it clear he has a good relationship with Dr Fox.

This is not good news - if we need a defence force at all, then we need one fit for purpose.