Clarke blocks office move by prison department

THE HOME OFFICE cancelled plans yesterday for the prison department to move to Derby, in effect writing off several million pounds already spent on the project. Kenneth Clarke, the Home Secretary, said that the move had been forced upon him by the austerity measures promised by the Government in July.

His announcement stunned prison department staff who had been preparing for the widely-publicised relocation to new headquarters next year. The department is already under strain as it pursues ministerial plans to privatise jails and services.

Four months ago, the Home Office signed a pounds 70m contract for the building, and face a severe penalty for withdrawing. One building industry source suggested last night that this could run to millions of pounds.

In addition, the Home Office said it had spent pounds 11.5m on the scheme so far, much of which cannot be recouped. The site cost pounds 4.5m and it is not certain that the Government will get its money back, even if it can find a buyer.

Five staff have already moved to Derby, the Home Office said. 'So far as we can, we will ensure that they are not out of pocket.' Almost 2,000 jobs would have gone to Derby in the relocation, including 800 for local people.

Mr Clarke said he regretted the decision but added: 'I must look to use the tens of millions of pounds that will be saved by the cancellation on other pressing needs in the public services for which I am responsible.'

He intends to divert the money to the police and the 'expansion and refurbishment of prisons', the Home Office said.

Tony Blair, the shadow Home Secretary, said: 'This is the first evidence of the cost-cutting measures that will hit spending departments across the board as a result of the economic incompetence with which the Government has conducted the country's affairs.'

However, staff were not just counting the cost in financial terms. The decision adds to uncertainty in a department that is already having to cope with widespread changes, including plans to put services such as computing and transport out to tender.

In addition, Mr Clarke is thought to be keen to privatise the management of a number of existing and new prisons.

Probation officers have voted to take industrial action in protest at what they say is the Government's failure to compensate them for extra demands imposed by the Criminal Justice Act, which comes into force next week.

Clarke profile, page 14