The St Paul's Tower on Arundel Gate will be the city's tallest building at 32 storeys when it is completed next year.

But the development has run into a series of financial problems. The original developers City Lofts called in administrators in July, then the US bank which had underwritten the project, Lehman Brothers, went bust last month. Now the bank which took over – Hypo – has also been hit by the credit crunch and was bailed out at the weekend by the German government.

While the project is continuing, city development firm Creative Sheffield is holding crucial talks wth Hypo to ensure the development stays on track.

Council bosses are also holding daily talks with the developers after the exterior panels facing onto Arundel Gate started to go up over the last couple of weeks which they say "does not meet the design intent and quality" of the agreed plans.

One of the key selling points for the building was its luxury high-specification look, with Terence Conran producing the interior design.

Council leader Paul Scriven said: "City Lofts are proposing some variations to the detailed design on the tower fronting Arundel Gate.

"They have submitted revised proposals to the council but these have not yet been agreed. In order to maintain progress on the site City Lofts have however started construction prior to agreement. The work undertaken does not meet the design intent and quality of the original planning approval.

"In order to resolve the difficulties we are talking to City Lofts daily, and mock-up panels are due to be put in place on site at the end of this week."

Variations are subject to discussion pending approval at a planning board meeting.

"I must stress that we will not allow buildings to be constructed if they fall short of the design standards set. We are building a Sheffield for the future," added Coun Scriven.

"City Lofts is an iconic development that will stand for years to come and, although we want to work with the developers to find a solution, we will not allow corners to be cut."

Tower builder Shepherd Construction told The Star: "What we originally used was a high-specification glazing specified on the original plans.

"We are now working with the council's planning department to produce a new aesthetic solution for the building."



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