Ministry pays £12m rent for unused offices

Lord Mandelson's former Whitehall empire is paying millions of pounds a year to maintain empty offices in the heart of London after they were deemed "surplus to requirements".

The Department for Business, Innovation and Skills (BIS) is paying £12m a year to rent two buildings where none of its staff work. It faces bills of more than £150m over the next 16 years if it cannot escape from the leases.

The BIS annual report for 2009-10, the last year Lord Mandelson was in charge, shows the department's "accommodation strategy" had identified the two sites as "surplus to existing and future operating requirements".

However, the lease on one does not expire until 2021 and the second five years later. The report says BIS had attempted to limit any losses by sub-letting parts of the buildings but warned: "Given market conditions at the time and future forecasts, neither the current nor future potential subleases recover the full costs."

The report also criticised BIS's internal procedures, particularly in relation to financial controls. The Permanent Secretary, Simon Fraser, reported: "Revised procedures were introduced to ensure submissions to ministers are informed by comprehensive financial advice."