The Armed Forces are “running on empty”, overstretched by the long-running operations in Iraq and Afghanistan, according to a report on the state of the military.

“The conflicts in Iraq and Afghanistan have seriously diminished the ability of the Armed Forces to meet future challenges,” the think-tank Demos said.

With such pressures affecting the Forces, the current situation was “unsustainable – financially, organisationally, operationally and in terms of military-society relations”.

“British Armed Forces need a sustained period of time – perhaps a decade – to recover from the intensity of operations undertaken since 2000,” Demos said, although acknowledging that this was unlikely “in such a turbulent world”.

The report also said that too much money was going on equipment that took years to come into service, and the Ministry of Defence was urged to spend more on personnel, including paying them higher wages to put them on the same level as the police.

“Equipment costs currently account for more than 40 per cent of the defence budget. We believe that this figure is too high and diverts resources away from where they are urgently needed elsewhere in the Force structure,” the report said.

“While high-tech equipment is important, more attention and resources should be channelled to the human dimension of the Armed Forces,” Demos said. More time was also needed to think through the range of defence missions. “The Government’s desire to use the Armed Forces as a ‘force for good’ in the world has proven to be more complex, difficult and organisationally demanding than was envisaged in the 1990s,” the report said.

“In the current environment of overstretch and resource constraint, serious consideration needs to be given to determine when it is realistic and practicable to employ the Armed Forces in this manner.”

Demos is the latest organisation to put pressure on the Government to revise its strategic policy to ease the burden on the Forces, although Gordon Brown has already announced a reduction in troop numbers in Iraq next year from 5,000 to 2,500.

The think-tank said that defence policy was based on a doctrine of expeditionary operations. But greater emphasis should be placed on “domestic operations”, having Forces ready to intervene in the event of a terrorist attack. “Training for national disasters, counter-terrorism and the protection of the UK must be a priority for our Armed Forces,” Demos said.

The MoD should also be ready to end or reduce capabilities that no longer had such relevance today.

“The Armed Forces cannot be expected to do everything, and the Government should not shy away from reducing capacity in those areas, such as antisubmarine warfare or high-level interceptors, that are of marginal relevance to the current security environment,” the report said.

Charles Edwards, head of the security programme at Demos, called on Service chiefs to be bolder in questioning the Government’s defence policy. “Ministers and civil servants need to be challenged more often in public on issues of policy and procurement, while Service chiefs should be more forthright in questioning the decisions of government in private,” he said.

Times Recommends

• Donor organ allowed child’s own heart to heal
• Michael Jackson: Not the final chapter
• Sacha Baron Cohen forced to tone down Brüno