Confidence in the future success of the York Central scheme is growing, according to council chiefs – despite “extremely high” inflation hitting key building materials.

Senior councillors have agreed to invest £35 million in infrastructure works on the landmark site, which will be recouped through future business rates going back to the council.

The first phase of infrastructure works, which will eventually deliver up to 112,000 square metres of office and retail space and up to 2,500 homes, as well as a large park, public squares and an expanded National Railway Museum, are now complete.

The £35 million Enterprise Zone funding will allow joint landowners Homes England and Network Rail to begin construction and further development of the site. The cash is being drawn down early due to rising infrastructure costs.

Tracey Carter, director of economy, regeneration and housing at City of York Council, said the council was confident the numbers added up as a range of different scenarios about the future scale and speed of the development had been calculated.

She added: “And confidence levels in the scale and success of the commercial elements of this scheme are also increasing.”

Ms Carter said the landowners had this week launched a year-long tender exercise to identify a development and investment partner for York Central.

They are also in confidential negotiations to bring a large-scale ‘anchor tenant’ to the site, which could provide 2,500 jobs for the city. 

A report to councillors stated: “This is hugely encouraging and will form a natural magnet for other occupiers. The space on York Central needs to be used to deliver the benefits of new, well paid jobs for the city, to catalyse economic growth.

“The prospect of a central government hub in the city has been widely discussed though as yet not confirmed,” the report added.

The York Central Partnership, which is overseeing the project, secured a £155 million funding pot to deliver the infrastructure, but the council report notes that inflation is likely to add to these costs.

The report said “the combined inflationary impacts of Brexit, a global pandemic and now the war in Ukraine” could not have been foreseen.

It added: “The cost plan will continue to be iterated as the scheme progresses, and opportunities for cost efficiencies, value engineering, and savings through the sequencing and timing of provision will continue to be explored.”

Council leader Cllr Keith Aspden said the city was “closer than ever” to achieving the benefits of York Central.

He noted the impact of rising inflation, but added: “This is an opportunity that many other cities and towns could only dream of having.” A £500,000 budget to deliver the nearby Jubilee Terrace to Scarborough Bridge riverside path improvement scheme was also approved at Thursday’s executive meeting.