A RESIDENTS' group says that council tax payers will have to pay out £2.5m for the rental of an eco-friendly building that could have been the home of the North-East regional assembly.

Durham County Council is looking to rent part of a £5m offices and conference centre at Aykley Heads, a site near County Hall in Durham City, to ease an accommodation shortage for its staff.

The council had been looking at the Rivergreen development, designed to have a minimum impact on the environment, to house an elected assembly - but last year's referendum resulted in a no vote.

Last year, the council denied the assembly would be located in the 48,000sq ft building and said offices at County Hall had been selected.

But Brian Clouston, treasurer of the Durham-based Taxpayers' Alliance, which fielded candidates at the last county council elections, said he was told by a county official that use of the building by the assembly had been an option. Now the council is looking to lease 20,000sq ft for seven years to house its own employees.

Mr Clouston said the council would be paying £18 in rent and service charges per square foot, making a total bill of £2.5m.

He said the council - the cabinet will shortly make a decision on the issue - could find cheaper accommodation elsewhere.

"There are plenty of obsolete call centre buildings that would be suitable for council staff," he said.

A spokesman for the Labour-run authority said there was an acute shortage of office space at County Hall, made worse by the need to vacate part of the annexe building and recent storm damage.

"As a result, we are having to take immediate action to resolve the problem, including converting the former staff recreation block into offices and moving some employees into alternative "satellite" accommodation elsewhere in the county. Notwithstanding that, there is still a pressing need for additional space, and so we are to consider the long-standing option we have to lease office accommodation at the Rivergreen development."

He said the council's possible use of the development was nothing new and that it could have been a temporary headquarters for the assembly - although the assembly may have opted for another location.