City stands behind stalled development

Under the previous administration, the Department for Communities and Local Government had agreed to contribute 12m towards the cost of the 600m scheme. Developer Hammerson went into partnership with Sheffield Council several years ago on the massive Sevenstone project, which stalled in the economic downturn.

Last year it was announced the council and regional development agency Yorkshire Forward were to take out loans of 10m each to keep the project going after compulsory purchase orders ran out.

Yesterday's withdrawal of Government funding, which would have helped to keep the scheme on ice until more private cash becomes available, is another significant blow.

Sheffield's Lib Dem-led council said it believed the Government announcement did not "automatically mean funding would be halted", but was "a pause" to allow Ministers to take stock.

Coun Ian Auckland, the authority's business spokesman added: "Today's announcement is just a continuation of the existing review position which is no surprise to us. We will of course work with Yorkshire Forward and the HCA on the review and continue to work closely with them, as has always been the case. A review does not automatically mean funding will be halted, rather a pause for Government to give closer consideration to future investments nationally.

"Sheffield Council remains firmly committed to and confident in the Sevenstone development."