PENSIONS chiefs in Whitehall axed more than 300 York jobs knowing they would be fined if they pulled out of the York office before 2008, Ryedale MP John Greenway has revealed.

But it has emerged that if the Department of Work and Pensions (DWP) finds a new tenant for its Monks Cross offices it may be able to avoid a "contractual penalty".

York MP Hugh Bayley says a non-Government body may take over the premises.

Chris Pond, the Parliamentary Under Secretary of State for Work and Pensions, also discloses in a letter to Mr Greenway that the cost of obtaining and setting up the York pension Centre was £2.09 million, excluding VAT.

He reveals that it cost an average of £639 to recruit each worker to the Monks Cross Centre - a total of £111,062.

The Government stunned staff in York when it announced that the York jobs were to be lost - less than two years after the centre was created at Triune House.

In his letter to Mr Greenway, Mr Pond says that the decision to close the York centre was made after detailed discussion and analysis of its ability to take on more work.

The letter was in response to questions by Mr Bayley and Mr Greenway in a Parliamentary debate.

Mr Pond writes: "The DWP cannot vacate Triune House until October 2008 without incurring a contractual penalty.

"However, if another tenant were to be found for this building it may be possible for the lease to be reassigned and for existing charges to DWP to be reduced or eliminated."

Mr Greenway said: "The public has a right to know what has been spent on a project that within two years it is now proposed to close down.

"Finding another use for the building should also include finding new jobs for staff."

The news came as staff in York had a chance to talk about the closure of the office in Monks Cross during a visit by DWP chief executive Alexis Cleveland.

It is believed the meeting, held in private yesterday, gave staff at the doomed centre an opportunity to ask questions and raise concerns.

The Pensions Service in York, along with a centre in Liverpool, is due to close next year.

Mr Bayley told the Evening Press that he secured the Commons debate to discuss the issues of cost and penalties involved with the pensions centre investment.

He said: "I asked the question to draw attention to the cost that will fall on the Government if it doesn't find another use for the building."

Mr Bayley also said that a non-Government body was considering taking over the use of the building, but he was unable to elaborate further at this stage.

Updated: 09:15 Saturday, July 24, 2004