TROUBLED shipbuilder Swan Hunter last night admitted it did not know how far over budget it would go on the contracts to build two Royal Navy ships.

Admitting it was already "significantly" over-budget, the company said it was still in negotiations with the Ministry of Defence (MoD) over fittings for the ships.

Reports in Sunday newspapers suggested the yard was asking for an extra £50m to finish the Largs Bay and Lyme Bay - despite already being £90m over budget.

But project manager John Mitchell said: "I have got no idea what the number is. What we have to do now is sit down and say what we need to finish this contract.

"Until we have done that with the MoD and discovered exactly what they want us to do, we can't put a figure on it."

Mr Mitchell said Swan Hunter had gone over budget because the MoD had changed the original plans.

The claim came as Swan Hunter applied to the Environment Agency for a change in its licence to allow it to start ship-breaking.

The change in direction for the Wallsend, North Tyneside, yard, which also has a mothballed shipyard on Teesside, could put it on a better footing for the future.

Swan Hunter is hoping to win shipbreaking work from Dutch company NV Ecodock, which would secure about 200 jobs, but it said it also wanted to set up its own shipbreaking division.