Published Tuesday, 24 April 2012
A review of the Prisons Service in Northern Ireland has recommended decommissioning HMP Magilligan by 2018 and replacing it with a new facility near Maghaberry.
Most of the jail's 400 staff currently live within 15 minutes of Limavady.
Edwin Stevenson from the Chamber of Trade says they pump millions of pounds into the town's local economy, and the move would be a major blow.
"Limavady is struggling at the present time, let's be honest about it," he told UTV. "We had something like 300 empty premises in the borough.
"There will be many more after this. We've got to look at the impact these workers have into this community and that will be a big impact I can tell you."
The Prison Estates Review has proposed closing Magilligan - the second-largest prison in NI - and building a new medium security jail near Belfast within the next six years.
It is part of a 10 year programme of reforms that will cost a total of £240m.
Magilligan, which holds around 500 inmates, underwent a multi-million pound redevelopment less than four years ago - but prison inspectors say much of the antiquated jail is not fit for purpose.
Alliance Justice Minister David Ford said: "Some of our prison estate is reaching the end of its working life and this strategy addresses what our options are to maintain secure custody for the prison population."
Some politicians have vowed to fight to save Magilligan.
East Londonderry MP Gregory Campbell said: "This proposal has to be binned. We can upgrade the existing site at Magilligan on a much more cost-effective basis, have a good prison in the greater Belfast area and a good prison in the North West and that makes sense for everybody."
UUP MLA Tom Elliott said: "There are approximately 400 jobs dependent on Magilligan and the loss to the economy of Limavady and neighbouring towns would be in the region of £10 million per annum. This would have an horrendous impact."
However Sinn Féin said they are in favour of shutting down Magilligan and returning the site to its natural, sand-dune landscape.
Cathal McLaughlin said: "We believe that this area is just natural for tourism. It is open, you've the ferry just down the road from Magilligan to Greencastle, you've tourists down at Benone.
"I think to re-develop the whole area, you know, and turn into a tourism gold mine basically."
The matter will be discussed by Stormont's Justice Committee before going out to public consultation, before a final decision is taken.
© UTV News