At the risk of sounding stupid....
The Treasury is not all bad; after all, they are merely the voices of their political lords and masters.
Tuc has neatly outlined one of the problems, Engines et al the other. These are, therefore:
(i) MoD madly wasteful and equipped with a tin ear to solving problems largely of its own making, and
(ii) no political will from any party to signficantly increase military capital spending to recapitalise the forces' equipment as that procured for the Cold War wears out.
If the answer is that we need Tiffy and Dave (and pls make it Dave-C + E-2D + CVF escorts or lets not bother...), then MoD needs to get its own house in order as well as getting the political consensus to spend the cash. 2.2% of GDP is not a huge amount of cash, historically.
S41