The village of Princetown sits surrounded by the desolate beauty of Dartmoor national park. It should, in theory, be a hub for the more than 2 million people a year who come to explore the bogs, granite tors and windswept moorland that in part inspired Sir Arthur Conan Doyle to write The Hound of the Baskervilles.

Today it more closely resembles a mining community after the pits closed. Dartmoor prison, which provided jobs for many residents, has been closed since last summer after the discovery of dangerous levels of radon gas. The prison museum, a former tourist attraction, is also closed, and the prison officers’ club is derelict. Quiet streets bear testimony to the ghostly finger of financial fate.

The fate of the prison has not dented the profits of the Duchy of Cornwall, however, which owns the land the village sits on. The taxpayer is still paying Prince William’s estate £1.5m a year to lease the abandoned prison, and is set to do so for another 24 years.

The government may soon face an even bigger bill: about 500 former inmates and staff who worked at the jail are planning to sue the Ministry of Justice, alleging they have been exposed to radon levels up to 14 times the legal limit, the Observer can reveal.