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The Government's 'Northern Powerhouse' department is to shut down its office in Sheffield, moving 247 jobs to London in a blow to the credibility of George Osborne's pet project.

And a dozen more regional offices of the Department for Business Innovation and Skills - including six in the North of England - are at risk of closure as the department moves to centralise policy staff.

Sheffield MP Nick Clegg condemned the move, saying: "This flies directly in the face of the Northern Powerhouse agenda."

“I want to be clear that no one ever put this to me in Government and I would not have agreed to it if they had.”

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And Labour's Shadow Civil Service Minister Louise Haigh said the decision "demonstrates the utter contempt the Tories have for the North."

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BIS civil servants were told this morning the Sheffield office would close by January 2018, as the department moves towards a "smaller workforce and more streamlined structures".

The Prime Minister's spokesman said: "The Business Department, like all departments, seeks to operate as efficiently as it possibly can to deliver the best quality of service to provide the right kind of guidance and advice to ministers.

"This is part of their process of becoming leaner and more efficient."

The restructuring will see the department move to a centralised headquarters in London, with six regional business centres set up around the country.

BIS operates 12 more regional offices in Billingham, Birmingham, Bristol, Cambridge, Cardiff, Darlington, Guildford, Gateshead, Leeds, Manchester, Nottingham and Watford - all of which are at risk of closure in the restructuring.

No decision has been made over which, if any, of the regional offices will be replaced by the six business centres, but the Department hope to offer as many staff as possible roles elsewhere in the organisation.

The business centres will each focus on delivery of a single business activity - such as higher education - but officials today said none of the six will be in Sheffield.

Sheffield Central MP Paul Blomfield said: “Sheffield needs jobs and London's overheating. This move makes no sense and it exposes George Osborne's empty rhetoric about the Northern Powerhouse once again.

"I've pressed Ministers to move public sector jobs out of London, as Labour did, and I'll be challenging this decision at every opportunity.

“Well paid civil service jobs provide opportunities for local people. They enable graduates of our two universities to stay in the city.

"Their spending in the local economy creates more jobs. And we need more of the country's top decision makers to experience life in the regions, not see everything through the distorted experience of London.”

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Speaking to Sheffield based civil servants this morning, BIS Permanent Secretary Martin Donnelly said: "Today’s announcement is part of implementing our BIS 2020 strategic plans to modernise the way we work, reduce operating costs and deliver a simpler, smaller department that is more flexible and responsive to stakeholders and businesses.

“Our operating model needs to be designed in a way that works for this smaller workforce with more streamlined structures.

(Image: Getty)

“The decision to close Sheffield by 2018 has not been taken lightly. The unions are being consulted and will be involved throughout the process.

“It is my top priority that all our staff are fully briefed and consulted on the process. We will provide comprehensive support to all those facing a potential change or loss of job.

“In relation to the new business centres, we will be working closely with our Partner Bodies over the coming months to develop firm plans for their office locations.”