Newnight has just reported the same thing and the Telegraph website was earlier tipping Hammond to take over.
So in one day Defence gets to keep £1bn of underspend and loses its SoS. What the Lord giveth with one hand, he takes away with the other.
So the big question - how many SoSs in how many years? And who is most likely to come in to take over? Odds on a female SoS?
Edited to add - rumours circulating of Ian Duncan Smith to Defence. If so, well, at least he has been in the military and previously served as Shadow SoS under William Hague. So at least he seems to have some relevant experience.