Pr00ne you are right to say that the Defence Budget was increased in the last public sector spending review but what is not generally known is the list of things the MOD were now going to have to pay for was increased as well. Major item was the cost of operations. The accepted Treasury norm is that the cost of operations sits outside the annual defence budget because we never know what will come up. Therefore costs for Iraq, Afghanistan, Sierra Leone etc are charged either to the Treasury (reserve) or the Global Conflict Prevention Fund (a mix of MOD, FCO and DfID cash). However, last time round HMT said that for some enduring operations like the the Balkans the MOD could reasonably predict expenditure and would in future have to fund these elements from within resources. Now they're not complete barstewards and they gave us the cash to do this with - trouble is they didn't give us enough and then spoke large about the increase in defence budget. Bit of an Irishman's rise really so no surprise that despite the 'longest period of increased defence spending in decades' we're still a bit strapped for cash and hence the swingeing cuts, sorry rebalancing, that are, is, taking place right now.
Still great fun though and as I used to say when teaching combat: never, ever give up!