Government wastage on office space put at pounds 100m

Empty government office space, equivalent to nearly two Canary Wharf towers or 70 Wembley stadium pitches, is costing the taxpayer pounds 100m a year.

The disclosure will be an embarrassment for the Chancellor after his demands for cuts in roads, social security, and other government programmes to fund Budget tax cuts.

Around 700,000 square metres of office space are vacant. Some of the offices which ministers have moved to are in the luxury class. The merger of the Departments of Employment and Education has released one building in Victoria Street, but, relatively speaking, the new Education and Employment HQ makes many school buildings look almost derelict.

The Department of Environment is planning to vacate the Marsham Street towers, for a newer building near Victoria Street with a handsome glass entrance which critics have dubbed "John Gummer's tomato greenhouse".

The former Cabinet minister John Redwood said: "Who said cutting public expenditure is always difficult when there is the equivalent of 7 million square metres of office space around. It must be worth a capital value of pounds 1bn. That would make a very nice contribution to tax cuts."

Mr Redwood, the right-wing challenger for the leadership against John Major this summer, staked his demand for tax cuts by demonstrating that much of his pounds 5bn alternative Budget programme could be provided by cutting out waste.

The empty office space includes two former MI6 buildings, one at Curzon Street, Mayfair, which has now been sold, and the other at Waterloo, now for sale on the commercial property market, vacated by the secret services for a lavish new office at Vauxhall Bridge; and the Alexander Fleming House tower block, designed by Erno Goldfinger, at Elephant and Castle, which has stood empty for years, after being vacated by the former Department of Health and Social Security. Negotiations over the lease are nearing completion for it to be handed back to the landlord.

Ashdown House, in Victoria Street, Westminster, is also vacant after the Department of Trade and Industry moved to a newer office in the same street. The DTI has several offices in the Victoria Street area. A former Energy Department office with a glittering atrium in Palace Street is still held by the DTI and is being taken over by another department.

The Government's target for disposing of empty property was missed last year. It had aimed to reduce the amount of empty space to about 7.8 per cent of its estate, but it has risen to 10 per cent.

The Department of Environment which controls the estate confirmed that about 10 per cent of the 7 million sq metres of total office space owned by the government was still vacant.

A spokesman for the DoE said the target of pounds 44m from sales of property had been exceeded, and much of the empty rented space was "at the poorer end of the market".

One reason for the failure of the Government to meet its disposal target is a change in rules next April, under which individual departments will become responsible with their own budgets for their offices.

Some departments have sought to lighten their burden by surrendering offices and passing the buck to the "Next Steps" agency, which will take over responsibility for disposing of government offices. As part of Treasury demands for savings, Whitehall departments, including Environment, Transport and Trade and Industry, are carrying out a rationalisation of office space, saving an estimated pounds 25m a year through surrender or disposal of 20 buildings accounting for more than 175,000 sq metres in central London.