By Martin HickmanAndy Coulson had a vague memory of Glenn Mulcaire's company being mentioned at the News of the World, but thought it was something to do with "finding people" or "surveillance," he told the phone hacking trial today.Referring to the NoW's private detective jailed for hacking in 2007, Mr Coulson said: "I didn't know the name Glenn Mulcaire until he was arrested with Clive Goodman [the royal editor]."Mr Coulson was asked about draft budgets for the financial years 2005-2006 and 2006-07 emailed to him by the paper's managing editor, Stuart Kuttner, which proposed a 50% cut in the paper's annual £105,000 contract with Mulcaire's company, Nine Consultancy. For reasons that have not been explained, cuts were not implemented.Speaking about the first budget document on 24 February 2005, Mr Coulson told the Old Bailey: "It's difficult because I have a memory of Nine Consultancy being mentioned on a budget document at a point."That's what I knew. That's what I had in my mind when Clive Goodman was arrested."He went on: "I knew it was an investigative service of some kind. All I knew was that Nine Consultancy had been mentioned at some point in a budget meeting."He said he thought he had been told by someone that using Nine Consultancy was "a money-saving exercise: that by using Nine Consultancy you were somehow saving money."Asked who had told him, Mr Coulson said: "It was likely the conservation was with Stuart, because it was a budget conversation."He assumed that the reference to "special inquiries" next to Nine Consultancy on the first document "meant finding people; surveillance, watching people."Mr Coulson, who became communications director for the Prime Minister in Downing Street, told the court: "It was not an area I was particularly interested in."I never really got involved in private investigators. I knew they existed and I knew they were used but as to what they did...?"He added: "I don't think I ever instructed a private investigator."Asked about the amount Mulcaire was being paid, Mr Coulson, editor of the News of the World between 2003 and 2007, said: "I wouldn't suggest £100,000 is not a lot of money but in the context of a £32m-a-year budget it's not a massive sum."I don't want to be dismissive of £105,000, but the reality was it wasn't a lot of money in the business I was running. We paid double that, I think, to the astrologer."He was asked about his relationship with his co-defendant and fellow former News of the World editor, Rebekah Brooks.The prosecution claims that the relationship - discovered by chance during a police search of Mrs Brooks's computer - would heave meant that the couple shared information about hacking, and in particular the hacking of Milly Dowler's phone in April 2002.Asked by his counsel, Timothy Langdale whether they had had "physical intimacy", Mr Coulson, 46, said: "Yes, there was an affair that started in 1998. It ended quite soon after. But it did re-start, as the court has heard."He went on: "It was not by any means continual. There were very long periods when the relationship was what it should have been: a great friendship."I don't want to minimise it or excuse it. It was wrong and it should not have happened and I take my full share of responsibility for it because of the pain it caused to other people, not least my wife."Had the relationship led to them sharing stories? asked Mr Langdale. "No, it wouldn't happen," replied Mr Coulson.He, Mrs Brooks and Mr Kuttner deny conspiring to illegally intercept communications between 2000 and 2006. The case continues, when Mr Langdale is expected to ask Mr Coulson about the Dowler story.