Oxfam is moving its headquarters and 700 staff out of Summertown in Oxford to a new building in Cowley.

The aid charity on June 6 revealed that it is relocating to the Oxford Business Park in 2005.

The announcement ends months of speculation, with Oxfam initially thought to be moving to Suffolk House in Banbury Road, Summer- town. With leases running out on its offices in nine buildings scattered across Summertown, Oxfam was anxious to bring together its staff and volunteers in one modern building for the first time.

Work on the three-storey 85,000 sq ft building on the site of the old South Works car factory site on Oxford Business Park will begin in December. Oxfam says the move will eventually save £250,000 a year.

Jane Cotton, Oxfam's Human Resources Director said: "We're delighted that we're not just keeping our Oxford roots, we're helping the regeneration of east Oxford.

"We will be exploring ways of enabling the local community to make use of the facilities."

The move will mean ending a 40-year headquarters link with Summertown.

Local businesses are worried about the loss of trade when Oxfam's staff move.

Sharon Liversage, manager of Queens Bakery, said she lost 25 per cent of her business when Marks & Spencer opened a store in Summertown, and feared she could lose 60 per cent of her lunchtime trade as a result of Oxfam moving.

She said: "Small traders have just survived the blow of competition from M&S and now they are having to swallow this one as well.

"The future seems rather uncertain."