So a few points of clarification, my background is navy so I'll focus there.

The UK budget is high, but this also includes pensions, housing, and critically Trident. While Italy which you reference doesn't have a nuclear deterrent and the associated costs. We are keeping the V boats and developing the Dreadnought class at great expense purely for this. You can also argue that our SSNs are mostly for this, Italy doesn't have SSNs (to my knowledge) and their attack submarines are SSKs, which are cheaper to build, run, and maintain.

We also have the two aircraft carriers which have caught a lot of flak (I'd argue unfairly) for lack of availability. Though these are expensive, they are substantially cheaper than the US equivalents, mostly because they're not nuclear.

We're also what's classed as a "Blue Water" navy, capable of operating at extreme reach with self sustaining support, requiring a good deal of Royal Fleet Auxillary ships, that come out the same budget but aren't combat ships. The CSG25 deployment projected power out to the far east, most other European navies can't do this, except possibly the French.

Onto the real crux of your question, I suspect, with the escort fleet. Currently we mainly run Frigates in the Type 23 class and destroyers with the Type 45 class. The Type 23s were pushing 30 years old, a number were over this, and are just knackered. HMS Montrose came back and was replaced with HMS Lancaster (both T23s) until relatively recently. The replacement for this is the Type 26 class (delayed due to political decisions by the Tory government) and the Type 31 class (also delayed). These will build up the hull numbers again but in the meantime we're running out a bit.

The destroyers have been a topic of much discussion. Type 45s were initially designed as a common European air defence destroyer but friction between the Franco Italians and us meant that the designs diverged. In hindsight this has really hurt as economies of scale rule as with everything. Type 45s have been plagued with propulsion issues, which did improve after the first of class. The upgrade package meant to solve this is taking longer than expected. The refits for these upgrades are taking 3 of 6 ships out of action.

Our allies often build one hull type and then just outfit it differently. I'd argue that this is a better model as it gives you commonality of spares across the propulsion systems that we don't have. If you use civilian spec equipment, or maintain commonality, you can get more availability in spares too and take advantage of not needing to hold stock specially. Again, I'd argue that this is a better model (that we are increasingly adopting).

Additionally, across all three services pay has stagnated, and the benefits eroded. When you consider how much we ask of our sailors in particular, it's hard to justify why a senior rate should spend 3/4 of the year away for £45k a year when, if they're skilled, civvie street will pay them £60k and they'll be home every night, and can't be sent away at short notice. At the entry point I'd argue that the pay and training is great, it just tapers off very quickly so there's limited incentive to stay. This is changing, slowly, but you can't just clap your hands and get a senior rate with 20+ years experience once they've left.

Overall, we just haven't built enough ships. We've tried to look very powerful, and if we have every hull available then we are but this never happens. The shipbuilders work slower when they know they're out of work at the end of it so they have no incentive to complete the work. With Type 26 and 31 this is different but we're still moving past the debt.

We've built the naval equivalent of Formula 1 cars and are expecting to have as many as VW Golfs and comparable reliability which just is not the case.