CONSTRUCTION firm Carillion has agreed terms with Sunderland City Council on a massive regeneration scheme worth up to £800m.

The initial £100m contract is expected to kick-start the largest development the city has seen, with a business district planned for the former Vaux site, which has stood derelict since the famous Wearside brewery closed in 1999.

Part of the 26 acre site is now used for car parking but it has long been regarded as an eyesore after schemes, including a supermarket development, failed to get off the ground.

Last year, work started to re-align two roads alongside the Vaux site after a long running planning wrangle ended with confirmation that the city owns the land.

Tesco had been locked in dispute with regeneration company Sunderland Arc since it bought the site in 2001, but the stalemate ended when Tesco agreed to sell the land to the public sector in a £22m deal.

Under the terms of Sunderland’s City Deal agreed with the government earlier this year there are plans to turn the former Brewery site which overlooks the River Wear into a business district to create city centre jobs. New shops, homes and a public square will be developed nearby as part of a wider bid to inject new life into the city centre.

As part of work, which could take up to 20 years, Carillion will also develop areas of Seaburn, Chapelgarth, Farringdon Row, Holmeside and parts of the East End.

Siglion, a new joint venture company formed between Carillion and Sunderland City Council, has been formed to lead the project.

Councillor Paul Watson, Leader of Sunderland City Council said: “It’s fantastic news that Siglion can now drive forward the city’s largest-ever development programme. The signing is a major step forward in propelling regeneration and economic growth that will transform key city sites.

“It also ramps up our ability to attract new investment, following on the major works currently being carried out in Sunderland. We are excited about working with our partners who are as committed as we are to the long-term success of the city.”

Neil McMillan, Development Director at Carillion Developments said: “Signing this transformational joint venture is an important milestone for Siglion and Sunderland. We now look forward to engaging with local businesses and key stakeholders who are keen to play their part in helping to deliver this vision for Sunderland.”

Igloo Regeneration has been appointed to provide development and asset management services to the joint venture.