Jack Straw, Labour's environment spokesman, claimed yesterday that Michael Howard, the Secretary of State for the Environment, had told the Prime Minister that a move to Docklands was no longer the bargain it seemed.
Falling rents elsewhere in Docklands have made Canary Wharf less attractive and ministers are comparing rents with the millions of square feet of empty office space around Westminster.
DoE sources are talking of the department moving out of Marsham Street during this Parliament. Meanwhile, the Treasury, which wants the Jubilee Line extension scrapped, is thought to be arguing that the pounds 180m being offered towards the line by the bankers running Canary Wharf, on condition civil servants move there, is a hidden subsidy.
With the Public Accounts Committee certain to investigate any move in detail, environment department sources say Mr Howard is determined to be able to demonstrate that the decision represents value for money.
Mr Straw said yesterday: 'I understand that a personal minute sent recently by Mr Howard to the Prime Minister poses grave doubts on the earlier claim that a move to Docklands would be a bargain for the taxpayer. I am asking Mr Howard to confirm that the latest figures show the cost to the taxpayer would be between pounds 130m and pounds 200m.'