The pressures faced by the armed forces are driving away experienced personnel and damaging morale, MPs have warned.
Troops spend longer on active duty than guidelines allow, MPs say
The strain of operating at full capacity in Afghanistan and Iraq has left the services "deteriorating", a defence select committee report says.
Personnel do not get enough rest time, and budgets are spiralling out of control, its annual MoD report adds.
Defence minister Bob Ainsworth said the forces were achieving "our highest priority - success on operations".
The committee's annual report on the Ministry of Defence warns that neither the Army nor the RAF are likely to make their personnel targets for 2008 because of problems with recruitment.
The forces have been operating at or above the level of resources they have been given for seven of the last eight years, including every year since 2002, it says.
As a result, the MPs conclude, personnel appear to be leaving in growing numbers.
"We are concerned that there are signs that voluntary departure in the armed forces, in particular the Army, is increasing and that in the RAF personnel are not extending for a further engagement to the extent that had happened in the past," the report adds.
So-called "harmony" guidelines within the Army and RAF for how long troops should remain on active duty during any one year are also being exceeded, the MPs say.
"This is another clear indicator of the pressure on our armed forces from the continuing high level of operations," the report says.
"Shortages remain within many specialist trades in all three armed services and, in particular, within the Army Medical Service."
The report also says that the estimated costs for the Astute submarine and Type 45 destroyer projects have shot up by £500m since March 2006 and the projected bill for the new Nimrod MRA4 is also rising.
"Such cost increases put further pressure on the future defence budget, which is already heavily committed," the committee warns.
'Difficult and challenging'
Although the defence budget has been allocated an extra £7.7bn by 2011, cuts are "likely" because of commitments to new projects, the report adds.
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I left in 2001 simply due to over commitment and under funding from the government
Mark Ames, London
Committee chairman James Arbuthnot said: "The continuing pressure on our armed forces personnel is likely to have an impact on retention and there are some disturbing signs of an increase in early departure in the Army.
"The army, the navy, the RAF are not able to do what they need to be able to do because people are leaving and that is, of itself, a strong indication of a falling morale."
Mr Ainsworth said the armed forces' retention rate was "broadly stable".
He said the number of trained personnel leaving was up 1% in the 12 months to September 2007 compared with the same period in 2006.
"In 2006-07, we gained 19,790 new recruits from civilian life - that is an increase of 9.3%.
"Army recruiting increased by 8% during the last financial year, with infantry enlistments up by 25%," he added.
Mr Ainsworth said scaling back commitments in Bosnia, Northern Ireland and Iraq would help the services meet the harmony guidelines.
"The armed forces' performance has been outstanding and I applaud their commitment, courage and professionalism," he said.
"I do, however, recognise that we are currently asking a lot of them in difficult and challenging circumstances."