Prospect, which represents more than 440 staff in the Insolvency Service, said the announcement came as a shock to the 45 staff based in Hull and followed a three-week review of the office.

During the last year, investigation work carried out in Hull, a centre of excellence, saved the British economy an estimated £2m and resulted in more than 20 directors being disqualified for over 100 years.

Hull is responsible for about one in 16 of all Official Receiver disqualification reports. The investigation of such reports is paid from fee income and not included in money from the Department for Business.

Yvette Hill, Prospect branch secretary, said: “The closure is a shock and a disgrace. The Hull office regularly takes on additional investigation and administrative work from other offices facing a spike in insolvencies or shortages of staff and is recognised by the senior management as a centre of excellence.

“The expertise of those staff being made redundant will be lost to the organisation. Dishonest directors will once again be able to sleep easily in their beds.”

The Insolvency Service provides the means for dealing with financial failure in the economy and with the misconduct of individuals who may be associated with it. The organisation has lost 1,000 staff since 2009-2010.

The agency administers and investigates:

• the affairs of bankrupts
• individuals subject to debt relief orders
• companies and partnerships wound up by the court
• disqualification of directors
• authorisation and regulation of the insolvency profession.

It also assesses and pays statutory entitlements to redundancy payments.

Prospect members are currently employed in 35 locations and their principal role(s) of insolvency examiner covers both company investigations and debtor and creditor petitions.