What does our navy do?

As a very ignorant civvie I've failed to get overly worked up by the funding cuts of our navy. In fact, rather like the Chancellor I think a good segment of the £40 Billion deficit could be wiped out by scaling down investment in the armed services, especially the navy. So I found this article to the contrary by Max Hastings of interest. Hastings must be one of the more eccentric and talented writers to have been conscripted to the Guardian team since civil liberties became top of the agenda for the 21st Century; rather than the boringly entrenched debates between left and right about redistribution. Yet Hastings also serves that nice role of providing the unwashed masses who read the Graun (such as myself) a bit of the Torygraph point of view as to how Britain should continue to rule the waves. His argument takes the line that we underfund the armed forces at our peril, as the quality of the soldiers will go down. Yet despite this argument why do we need a navy of the size we do and what does it serve? As the front page of the Telegraph stated a few days ago (in a piece ironically in defence of the navy, revealing the funding cuts), the last time we used its full capacity was the Falklands War. Are there any better reasons to retain the navy and what are they?