Major scuppers Portillo's Arch sale

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Political Correspondent

The Prime Minister has delivered an embarrassing snub to Michael Portillo, the Secretary of State for Defence, by intervening to veto the sale of Admiralty Arch, which connects Trafalgar Square to the Mall in London.

John Major acted after Mr Portillo, a strong advocate of privatisation, allowed the appointment of consultants to advise on options for the Arch, a landmark at the centre of British naval history for 85 years. A Downing Street spokesman said: "The Prime Minister was consulted in the last 24 hours and made his view clear."

Admiral of the Fleet Lord Hill-Norton, who labelled Mr Portillo "a little creep" over plans to sell off historic naval buildings, hailed the announcement as a victory: "I'm delighted to have caused an uproar. By putting a ferret down the hole, we appear to have squirted something out."

The Government issued a statement yesterday saying it had "no intention" of selling the building. The reversal of its position came after a furious row erupted yesterday over comments made by Lord Hill-Norton, a former Chief of the Defence Staff. He fiercely criticised plans to sell the Royal Naval College at Greenwich and Admiralty Arch, describing them as historic and important parts of Britain's maritime heritage. "I would have thought that even a little creep like Mr Portillo would have understood that," he said.

The Armed Forces Minister Nicholas Soames leapt to Mr Portillo's defence. Mr Soames said: "This Government has the highest regard for the historical importance and significance of the UK's heritage including the Royal Navy's heritage. Michael Portillo respects the great traditions of this country and takes pride in our national heritage."

The speed of the U-turn caused confusion yesterday as the property consultants asked to study the options for the future of the Arch said they "did not know" whether a sale was one of the options. Richard Haynes, a partner in Knight Frank, said: "We haven't got our brief clarified yet. I don't know whether or not it includes disposal." A Department of the Environment statement yesterday said: "The Government has no intention of selling Admiralty Arch and it will remain in public sector use." But sources had earlier said the review of options was open- ended and included "disposal".

Admiralty Arch was vacated by the Ministry of Defence in 1994, but part of it is still occupied by the First Sea Lord, Sir Jock Slater. Until yesterday's surprise statement, it had been assumed that one of the more likely options for the building was "sale and leaseback", with a private contractor taking over the building, refurbishing it and then leasing office space back to the public sector.

A similar arrangement is currently under way with the Treasury building on Parliament Street, opposite the Houses of Parliament. Full bids for the Treasury from two consortia are due to be submitted by the end of this month, with a decision expected by the end of March.