Labour builds a pounds 2m Campbell's kingdom headline here

Is there a hidden agenda behind the party's grand new press centre? Catherine Pepinster reports

WORK begins tomorrow on building the Labour Party a pounds 2m press and publicity centre in the heart of Westminster which will serve as the "War Room" for the party's forthcoming election campaign.

Two massive floors of offices, totalling 25,000 sq ft, at a rental cost alone of pounds 586,000 over the next two years, have been taken in the modernist Sixties office block Millbank Tower, just a few minutes' walk from the House of Commons - and across the Thames from MI6's new HQ.

The centre includes a 240-seat tiered auditorium suitable for election razzmatazz presentations and press conferences. But there is much more room than would be needed merely to accommodate visiting journalists.

According to one of Britain's leading interior design firms, the available floor space would take 250-300 working staff, enabling a huge team of election campaign workers to be based there. But this also prompts speculation that the real aim of the Labour leader, Tony Blair, and his press secretary, Alastair Campbell, in building the Millbank centre is eventually to replace Walworth Road in south London as the party's headquarters. It is known that Mr Blair's office will from the start have a "big presence" in the centre.

A source close to the scheme said: "My understanding is that the price quoted for the whole project is pounds 2m." The landlord of the building, the insurance giant Legal and General, has, after hard bargaining with the party's agents, cut Labour's rent from pounds 19 to pounds 13.40 a square foot for the first and mezzanine floors of the tower, a Thames-side landmark near the Tate Gallery completed in 1963.

The deal gives Labour an opt-out or break clause after the next election, although the break clause for the auditorium is for seven years.

Refurbishing the offices and fitting them out begins tomorrow. The project managers, Trench Farrow and Partners, refused to comment. But the leading interior design company BDG McColl was able to give a financial picture of refurbishment for an office complex of the size and type Labour is taking. Besides the rent, it estimated that it would cost pounds 67,000 in fees, plus pounds 625,000 for the fittings and pounds 875,000 for fixtures including phones, faxes and personal-computer workstations.

The centre will be the most potent and visible manifestation yet of "New Labour", and is evidence both of Tony Blair's vision and of Alastair Campbell's growing power and influence - both men are understood to be behind the decision to move the party's press operation out of Walworth Road.

But whether or not it eventually becomes party HQ, some officials are already concerned that the two buildings will equate with the party's two rival camps: while New Labour is based in Millbank, in politically chic SW1, Old Labour and the backroom staff will still be housed in John Smith House, Walworth Road, SE17.

Life for those in the new complex will certainly be an improvement on Walworth Road, which is several miles from Westminster and within the shabby confines of the Elephant and Castle neighbourhood of the capital. The Elephant's attractions are few: a Department of Health outpost, the lurid-pink Elephant shopping centre, and one notable eaterie, the Pizzeria Castello where dinner with wine costs about pounds 20 a head.

Mr Campbell and his press officers, on the other hand, will be able to lunch their contacts much more extensively from Millbank, where several fashionable haunts are near by including Antony Worrall-Thompson's Atrium (about pounds 30 a head), L'Incontro (pounds 50 a head), and Shepherd's (pounds 35 a head).

The speed with which Labour has organised for work on the project to begin suggests that time is of the essence. Labour completed its deal with Legal and General at the end of September and the move was ratified by its National Executive Committee at the beginning of this month.

But while Labour's opponents may think this shows a desire to begin election preparations as soon as possible, there may be an even more urgent reason still - a race against the clock and the intervention of the Secretary of State for National Heritage, Virginia Bottomley.

The problem is that the Millbank Tower may soon become a listed historic building and any alterations to it would then have to be approved, after a lengthy process, by Conservative- controlled Westminster City Council.

To many people, the tower is an eyesore. But to the Government's advisory body, English Heritage, it is an impressive example of modernism at its best; a classic combination of horizontal and vertical slabs. Designed by Ronald Ward and begun in 1959, it was originally called Vickers House - the engineering company still occupies offices there, along with the United Nations and the Central Statistical Office.

It is one of 40 post-war buildingsthat English Heritage has put forward for listing. For the first time, the public was consulted on the listing suggestions; English Heritage suggested that Millbank Tower should be grade II* - making it among the top 5 per cent of historic buildings in Britain. Its fate now lies in the hands of Mrs Bottomley, who is expected to announce her decision in a matter of weeks.

If work were not starting this week on Labour's new complex, Mrs Bottomley and Westminster's council might between them keep New Labour in Old Labour territory until the next election has come and gone.