Aircraft carrier: What is costing £6.2bn?

The Ministry of Defence has confirmed that the cost of building the two carriers has increased to £6.2bn. The latest news follows a series of price increases since the contract was first signed in July 2008.

The original contract, signed by the Labour government, was worth about £3.9bn. The carriers, over three times the size of the current Invincible class, were each planned to be equipped with up to 40 Short Take-off and Vertical landing (STOVL) F-35B jets.

By the time the coalition came to power in 2010, the project cost had risen to an estimated £5.2bn. As part of the government's Strategic Defence and Security Review, it announced a change of plan and said the carriers would be equipped instead to carry F-35C jets.

The F-35C jets have a longer range and are capable of carrying a higher weapons payload, but they require catapult and arrestor gear, so-called "cats and traps" to be able to take off and land.

At the same time, Mr Hammond also announced that the second carrier, Prince of Wales, would be built but its exact future was unclear. With costs continuing to rise, Mr Hammond said the ship might have to be sold or mothballed.

In May 2012, Mr Hammond announced a u-turn over the jets - saying the adaptations to the ships were going to cost far more than originally thought - so the government would stick to the original decision to buy F-35B jets. He estimated at the time that the change of plan had cost about £100m - but now says the figure was in fact around £62m.

According to reports, the latest price increase to £6.2bn is mainly down to failing to factor in the costs of inflation and VAT into the original contract.

Mr Hammond said the government had agreed new terms for the contract and any future variation in price would be shared by the government and the contractors.