Developer Urban Splash's delayed £80m regeneration of a derelict woollen mill in Bradford may get the go-ahead if a deal on state aid is agreed between the government and the European Commission.
Urban Splash's proposals for Manningham Mills, a 75,000 m2 residential and commercial scheme, were thought to be quashed after the commission ruled that the government subsidy, known as "gap funding", broke European Union competition law. Under UK regeneration regulations, the government would have paid for almost one-third of the scheme's £21m first phase.

Officials at the Office of the Deputy Prime Minister and the DTI are planning to use Manningham Mills as a test case to amend the gap-funding ruling.

If approved by the commission, the result would be that conservation projects, such as the regeneration of Victorian mills, could be given public funding. The UK has submitted two other schemes to the commission that, if approved, would allow up to 60% of residential schemes to receive funding.

A spokesperson for the ODPM said: "We have notified two new schemes to the European Commission. The schemes would permit the provision of gap-funding support for housing developments and the regeneration of derelict land. We are about to notify a third scheme that will cover the conservation of historic buildings."

The schemes would permit the provision of gap funding support for housing and regeneration

ODPM spokesperson

Urban Splash director Bill Maynard said: "The whole thing has been a very frustrating process, but we are confident that there is a route out of all this and that we will be able to start on site within the next 12 months."

The local regional development agency – Yorkshire Forward – and Bradford council have been investigating ways to secure funding for the scheme for more than a year. They recently appointed two external consultants to find solutions and liaise with the DTI.

One of these is Fred Manson, who was in charge of the £1.5bn Elephant & Castle project in south London in his role as head of regeneration at Southwark council.