Spiralling office space rental fees are costing the people of Bermuda $8.5 million a year ? and that bill could jump to $12m in the next year, it is claimed.

That is why the Government is taking its tougher stance on office space allocation, such as the controversial downsizing of the Office of the Auditor General, according to Works and Engineering Minister David Burch.

And he found reason to point out that in Hamilton, where the Government is having to dance to the tune of the private landlords when it comes to leasing out office block space, "the landlords read like a who's who of the UBP."

Senator Burch has come under fire for the way his Ministry handled the relocation of the Auditor General's office to a smaller and unprepared office space at the end of May.

Explaining the rationale for the overhaul of Government office space requirements, Sen. Burch said: "We simply cannot allow the ever increasing expansion of the civil service and its consequent demand for additional office space.

"Currently the Government spends $8.5 million for private sector rental accommodation."

He said in a single year the cost had jumped by 40 percent and it was likely to rise to $12m next year.

To combat this Government has a three-pronged plan of action, said Sen. Burch.

It is revising and standardising the office space requirements for Government departments, it is also looking to relocate, where possible, departments away from Hamilton to Government-owned buildings at Southside and the West End, and Government will increase the number of offices it actually owns rather than leases.

"Clearly, owning accommodation is less expensive than renting, particularly in the long term. Government is clearly a long-term occupier of office accommodation and should have an occupational strategy on this basis," said Sen. Burch.

Benefits from relocating Government departments to the east and west of the Island would be reducing traffic congestion and pollution in Hamilton and stimulating the economies at either end of the Island, according to the Minister.

He said a long term plan needed to be created. A "rough and ready" review of Government's present city centre rented and freehold-owned space showed it has control of 120,000 sq ft of office space and rents out a further 105,000 sq ft.

It is estimated that a further 75,000 sq ft is needed to ideally meet requirements.

Sen. Burch said: "Government will need to renew some leases until additional office space is found, and then, on a phased basis, transition from leasehold to freehold until Government is free of leasehold space and its ever-increasing rent bill."

He continued: "The planned combined police and courts building will free up the existing buildings currently housing the Hamilton Police Station, Supreme and Magistrates' court buildings. This will provide approximately 15,000 sq ft of office accommodation when they become available."

A further 27,000 sq ft will become free when the Bermuda Land Development Corporation's offices at Lillyfield and Wedco's Clock Tower space at Dockyard is refurbished.

He said: "When the measures begin to make an impact on the spiralling cost of rental accommodation, much of the pain we feel in adjusting to change will abate, as we realise that we directly benefit as it positively affects the taxes we are all required to pay."