The scheme involves repaving the lower section of the precinct to the standard of the Peace Gardens, Barkers Pool and Howard Street.

According to the council, the work is crucial for the kickstarting of the long-delayed markets hall and shops and for the regeneration of the wider area, sending "a strong message of confidence in Sheffield in the face of the recession".

The whole of the £2.9m bill for the improvements is due to be met by the Government through its regional development agency, Yorkshire Forward.

But with conditions attached, councillors are being made aware of the potential financial risks they face.

Details will be spelled out to the city's cabinet on Wednesday in a council report that underlines the importance of sprucing up The Moor between Earl Street and Cumberland Street to pave the way for the new markets and, it is hoped, the redevelopment for offices of the site of the Government offices at Moorfoot.

The precinct was last paved 13 years ago, but to a "cheap" construction, which has deteriorated quickly. Market stalls introduced in the early '80s are now described as being "in a poor state".

Comprehensive refurbishment was due to be financed by the developers of the markets, but the council report says they are no longer prepared to do this.

At the same time, they say they will not press ahead with the markets unless the environmental improvements are guaranteed.

Yorkshire Forward has stepped in, but on condition that the markets are built within five years, otherwise it could ask for its money back.

Construction is estimated to start early next year, but councillors are aware of the potential financial scenario in the event of developers RREEF backing out.

Another potential hazard is being pointed out. To meet Yorkshire Forward's "tight" timetable, work on The Moor has to be completed by May, necessitating a start towards the end of September.

To set the ball rolling as soon as possible, the council is preparing to spend up to £570,000 on design work and ordering materials – money it believes it will be able to reclaim.

In general, the risks are being described as manageable.

In his report, Yunus Ahmed, of the City Development Division, says the scheme for The Moor is "the catalyst for delivering a new indoor market for which there have been several false starts".

Sheffield is looking "to send a strong positive signal about the city's regeneration at a time when most other towns and cities are struggling to kickstart any new schemes".

"Ultimately it should help to safeguard jobs, revitalise an important part of the city centre and help attract inward investment, especially given its location next to Moorfoot and given the slow timing of the Sevenstone (retail quarter) development."


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