Here is the Right Honourable gentlemans reply:
In a letter sent to the Speaker of the House at 1130 this morning, the Defence Secretary said:
"This morning, as you will be aware, Liam Fox is reported as accusing me of misleading the House in an answer I gave on 30 October (Column 14).
"I do not believe I did mislead the House.
"Having looked again at the complete answer I gave, I do not think it was misleading. If however any part of it gave a misleading impression, then it was unintentional, and obviously I am sorry.
"I was trying to correct a misunderstanding of the reform of the separation allowances. These reforms were decided three years ago. I have reviewed them and sought assurances from the department that there is no reduction in the total amount of money for allowances for service personnel as a result.
"It is wrong to suggest, as Liam Fox did in his question, that these reforms were about cuts. They were about reforming an out of date system and making it fairer overall. They had the full support of the Chiefs of Staff, and the independent Armed Forces Pay Review Body, as well as the Department.
"Most importantly, I also wanted to correct the entirely false link which some have drawn between these reforms, decided three years ago, and the introduction in October of the new operational bonus. The two have nothing whatsoever to do with each other.
"Contrary to what Liam Fox suggested on the 30th of October, there is no question of the Government giving with one hand and taking away with another. The operational bonus is paid for by £60m of new money agreed with the Treasury, precisely to ensure that no money will be taken away from pay or allowances or any other area of Defence.
"Everything I have done in this area has been to increase the amount of money paid to service personnel. As I have said many times in the House, support for our forces on operations, including pay and conditions, has been one of my highest priorities since coming into this job, and will continue to be so.
"As this is a matter of public interest, with your permission Mr Speaker I shall publish this letter on my Department’s website and in the House of Commons Library, as well as copying it to the opposition spokespersons and the Chair of the HCDC."