The C-17s we have are leased from the US Military. They are absolutely pivotal in the type of operations we have conducted over the last 8 years and will continue to provide vital support to operations until at least 2015.
We dont have enough, they are expensive to lease, and they provide a vital capability. What is so stupid about that?
Why dont we just buy C-17's then? Or am I being thick? 
I heard we are not allowed to 
You heard correctly
As the development of the C17 was partially funded by the US Government they "control" who is allowed to purchase as well as who can lease, the aircraft.
UK is in fact the only non-US country flying the C17, which was allowed as a "special concession" by the US Senate/Congress. Special acts had to be passed to allow it.
We are allowed to Lease .. but not to buy ....
The A400M, by the way, is NOT a replacement for the C17 ... but is designed to replace the C130K, VC10 and Tristar ... all very old aircraft well past their use by dates, as well as the C130J which, although new(ish) has been worked at 4 times it's planned rate for many years ... thus they are also knackered...

The C17 is a Strategic asset, the A400M is designed to be a Tactical asset.
Put simply .. the C17 is too damned expensive (and the yanks won't let us ... part of the conditions of lease... ) to use "in theatre" where there is the risk of it being shot at ... so we need tactical (in theatre) aircraft that WE control to do the job, as the C130J simply can't do it for much longer.
The previous government put so much money into airbus - just to get a few jobs in UK - that there is no money now to purchase more C130 J's .... we are financially and politically "tied" to the A400M
