The government's spending watchdog, the National Audit Office, has poured cold water on the Ministry of Defence's predictions on how much it will raise by privatising the Royal Navy dockyards.

The BBC's Defence Correspondent, Mark Laity discusses the report

The NAO said the sell-off could bring in as little as a third of the £156m forecast by the MoD.

The Devonport and Rosyth dockyards were taken over in management buy-outs, which the previous Conservative government said would save £156m in 10 years.

The yards perform most of the Navy's repair work on its fleet - business worth around £400m a year.

The lower than predicted savings were attributed to rising staff costs and other overheads.

The report also highlighted a £156m increase - 60% - in the estimated cost of a nuclear upgrade at Devonport since the decision in 1994 to locate the facility at the site.

A Trident submarine being built at Devonport dockyard

The main facilities are not now expected to be completed until January 2002 - a 29-month slippage.

Liberal Democrat defence spokesman Menzies Campbell blamed the former Tory government for locating the nuclear submarine refitting facilities in Devonport, taking them away from Rosyth.

"The real purpose of the government was to try to staunch the haemorrhage of support away from the Tories in the West Country," he said.

"The irony is that the Tories still took a pasting and the British taxpayer has been left to pick up the bill."