Preparations for the next UK defence review are under way; a struggle is imminent and the lines of battle are being drawn. There is a grave danger that in the new ‘age of austerity’ defence planning—and strategy generally—will be driven by tribal conflicts, either between supporters of one or other of the armed services or between contending viewpoints about the nature of conflict. And there will be others who will argue that the defence review should be driven simply by the need to reduce government expenditure, as quickly as possible. These arguments not only reduce the defence debate to a struggle between various incompatible and uncompromising tribal beliefs—‘war among the fetishes’, perhaps—they also miss the point. This article gauges the extent of the economic challenges which the UK defence establishment will confront over the coming decade. The authors consider how best to approach the problem of undiminished (and even expanding) commitments at a time of decreasing resources. They argue that defence planning should be driven by the notion of value (the ratio of function to cost), which in turn requires both a clear national political vision and a defence establishment which is output- rather than input-oriented. Finally, the authors assert that defence must transform itself to be able to achieve the outputs required in the most efficient and responsive manner.