A “catastrophic” decision by the Ministry of Justice to sign a 10-year lease on a prison where high levels of a poisonous gas had been detected is expected to cost the UK taxpayer more than £100m, parliament’s spending watchdog has concluded.

The public accounts committee said the 2022 deal to rent HMP Dartmoor from the Duchy of Cornwall was signed “in a blind panic” by senior civil servants looking to guarantee prison places.

The category C prison, which held many sex offenders, was closed in 2024 after levels of radon up to 10 times higher than the recommended limit were recorded in some areas. The government has since admitted that it was aware that “elevated readings” of the gas were found in 2020.

Radon, a colourless and odourless radioactive gas, causes about 1,100 lung cancer deaths in the UK every year, according to the Health Security Agency.

A report released by the committee said officials from HM Prison and Probation Service (HMPPS) failed to negotiate “a good deal” and signed it in 2022 before carrying out further radon tests.

“Under the contract terms, the department cannot terminate the lease until at least December 2033. Overall, HMPPS is currently paying around £4m per year for an unusable prison. This includes rent, business rates and security costs.

“Additionally government must pay additional costs – around £68m – on fabric improvements to the Dartmoor site over the period of the lease,” the report said.

The committee questioned civil servants about the deal last year. Geoffrey Clifton-Brown, the Conservative chair of the all-party committee, said the MoJ’s handling of HMP Dartmoor had been “an absolute disgrace, from top to bottom”.

He said: “We heard claims that the leasing of this unusable building, known for years by HMPPS to be choked with radon gas with all the health risks that entailed, was sensible, driven by the need for prison places.

“Our committee rejects this excuse outright. Dartmoor appears to the committee [to be] a perfect example of a department reaching for a solution, any solution, in a blind panic and under pressure.

“Government must now respond to us on what it has learned from this catastrophic failure.”

The decision to close the jail, forcing the relocation of 682 inmates, followed years of monitoring and attempts to mitigate the radon levels. Staff at the prison began monitoring levels in 2010, but the last of the 640 prisoners and 159 staff were not moved out until July 2024.

Questions have since been asked about whether HMPPS could have acted sooner.

In a written answer in parliament in July last year, the MoJ said: “Elevated radon readings were first found at Dartmoor in 2020.” The BBC reported in October that radon gas levels higher than the recommended limit were also detected in 2007.

More than 500 former inmates and prison officers are bringing legal claims against the government, claiming their health was put at risk.

The Duchy of Cornwall, the estate that provides a private income for Prince William, owns HMP Dartmoor and leases it to the MoJ.

An investigation into radon levels at the prison launched by the Health and Safety Executive in 2023 is ongoing.

The national chair of the Prison Officers Association, Mark Fairhurst, welcomed the report. “It is abhorrent that such a failure has not yielded consequences for the high-ranking decision makers that not only put everyone within Dartmoor prison at risk but also wasted millions of pounds of tax revenue,” he said.

Appearing before MPs in October, the MoJ’s permanent secretary, Jo Farrar, defended the decision to sign a 10-year Dartmoor lease in 2022.

“At that time, the prison system was at risk of running out of prison places, and Dartmoor provided over 600 places,” she said. “A sensible and pragmatic decision was taken in March, when all the information that we have now was not available, that it was necessary, given the issues the government were facing, to sign the lease and keep Dartmoor open.”

A Ministry of Justice spokesperson said: “This decision was taken in 2022. This government inherited a crisis in our prisons system, where prisons were on the brink of collapse, threatening a total collapse in law and order.”