(If you read this post please note I have got ASW and ASuW the wrong way around, but I can't change it because my iPhone can't scroll down in edit mode!)
DFM
I suspect that not one thing cancelled the project - it was everything added up as whole that did it. I hear (rumour) that on top of £3.5Bn we were looking at a whopping £200M per year in support costs for just 9 aircraft - I think that the Camel's back finally gave way! That's £390M each plus £22M per year to support each aircraft.
Out of interest the Boeing P-8 MMA is approx $20Bn for 122 aircraft, that's $160M each or £100M in UK money.
Now to get really simple (I'm good at that) take a 4 year capability gap and in support costs alone you are now in the market for 8x P-8s and I bet their support is cheaper, with less risk of further increases and doesn't have the "Nimrod stink" about it (I use that term light heartedly).
Now if we look at something like Predator B "GUARDIAN", then you could buy half a dozen aircraft and all the supporting paraphernalia for 1 year's worth of MRA4 support. The aircraft can fly for 20hrs at a time or more, has a cracking EO/IR turret and a great surface search radar. You could adapt an ASRA payload for it as well. No good for ASuW though, so we would have to rely on RN T22/23, Merlin/SK ASW and SSNs. But you could run 3x 20hr ASW/LRSAR sorties a day with about 15% of the manpower currently at KIS.
Here's some info on it:
http://www.cbp.gov/linkhandler/cgov/...ardian_uas.pdf
So, my friend, I suspect the difficult decision was thought through with all the options laid out by Joint Capability and DUW/CapISTAR.
LJ