Council in rescue plan for big retail development

The scheme, which was supposed to begin last year, has been on hold for several months because of the economic downturn, leaving senior councillors with a serious problem.

Much of the land and buildings in the area, west of Pinstone Street, are subject to compulsory purchase orders, but these are due to run out in July 2011 with no private cash available.

Now Sheffield Council is hoping to borrow 10m itself, and access a grant worth 9.57m from regional development agency Yorkshire Forward – a grant which must be approved by the Treasury.

Coun Colin Ross, the authority's cabinet member responsible for Sevenstone, said: "It has become necessary for the public sector to provide this investment because of the current economic climate.

"Every city has had difficulties securing private sector funding but by using public cash to protect this development opportunity we will be ready to proceed when the upturn comes.

"I must stress that that this funding in no way acts as a financial subsidy for any developer. This is solely about securing the site for future development."

Property development firm Hammerson is supposed to be funding the entire project, and the council said that when work finally begins, the company would repay the full 19.57m cost of the rescue scheme.

The total cost of the Sevenstone scheme is forecast at around 600m and, if it does go ahead, would include a new John Lewis store at its heart. The council said the scheme was necessary to allow Sheffield to compete with other cities such as Manchester and Nottingham.

Carolyn Kenney, project director for Hammerson, said: "We are supportive of the council's and Yorkshire Forward's efforts to secure the site. The funding provides an additional level of assurance for the scheme which will provide new retail provision for Sheffield."