Marks & Spencer has pulled out of plans to open a flagship store in Rochdale town centre as part of a £100m development.
The news is a massive blow to the Rochdale Riverside scheme, raising fears the entire project could be jeopardised.
But council chiefs have come out fighting, saying M&S has a ‘legally-binding agreement’ and should be ‘under no illusion that we expect them to fulfil their obligation to Rochdale’.
M&S was the first major name to sign up for the development, which is set to transform the area around Smith Street and Baillie Street, announcing plans in November 2015 to close its nearby Yorkshire Street branch and move to Rochdale Riverside.
Speaking at the time, council leader Richard Farnell described it as a ‘momentous day’ and the ‘start of the re-birth of Rochdale town centre’.
On Thursday bosses at M&S confirmed they had made the ‘tough decision’ not to move.
An M&S spokeswoman said: “We’re adapting to changing customer habits and this means taking some tough decisions – we’re investing in new stores, relocating stores and, in some cases, closing stores.
“In this case, we don’t believe relocating the store is the right move and have therefore informed the council that we no longer intend to proceed.
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“Instead our intention is to continue to serve customers in Rochdale from our Yorkshire Street store and from M&S.com.”
But Rochdale council chief executive Steve Rumbelow called on M&S to honour the contract.
In a strongly worded statement he said: “As far as the council is concerned, Marks & Spencer has a legally-binding agreement to take space in Rochdale Riverside. They negotiated a deal as a key anchor tenant and committed to it knowingly and willingly. On that basis, Marks & Spencer should be under no illusion that we expect them to fulfil their legal obligation to Rochdale and the new retail scheme.”
Planning permission for the first phase of Rochdale Riverside was approved in April.
It will contain around 25 shops, restaurants and cafes, and it is estimated it could create more than 1,000 jobs and boost the local economy by £17m a year.
Other firms to have signed up for the scheme include Next and cinema chain Reel.
Groundworks began in the autumn, but now fears have been raised the M&S decision could jeopardise the entire project.
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Coun Ashley Dearnley, leader of Rochdale’s Conservatives, said: “Without Marks & Spencer I cannot see how the development can continue.
“It is very disappointing. It was a great opportunity, but now the council has to think long and hard about the way forward.
“We cannot continue to spend lots of public money on something that may not be feasible.
“It’s terrible coming at the 11th hour like it has.”