Newcastle United fans have welcomed a U-turn on plans to give more than £3m in public money to a contentious development next to St James’ Park.

The North of Tyne Combined Authority (NTCA) had been set to award funding to cover a “viability gap” in the much-debated regeneration of Strawberry Place.

But politicians decided on Tuesday afternoon to press pause on that £3.5m deal, with sources telling the Local Democracy Reporting Service (LDRS) that the idea was likely to be scrapped.

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The building of new flats, offices, and a hotel on a site that was sold by former NUFC owner Mike Ashley has been heavily criticised by fans, who have long feared that such a move would put an end to any prospect of the stadium ever being expanded – and perhaps even force the football club to one day leave St James’ Park.

Some supporters have expressed hope that the Saudi-led consortium which has since taken over NUFC could seek to buy back the land.

After Tuesday’s decision, Newcastle United Supporters Trust board member Greg Tomlinson called for city decision-makers to secure a new future for the prime site.

He said: “When the Newcastle United Supporters Trust objected against this development in 2019, we said this development should not go ahead for a number of reasons including the fact that this land could be used by a “successful and ambitious Newcastle United” to provide a gateway to St James’ Park and potential expansion of the stadium.

The landscape has now changed, since the takeover we now have our ambitious Newcastle United back, and this land should be used to provide a link from the city centre to St James’ Park, as the club is now back at the beating heart of our city.

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“The Trust welcomes the decision today by NTCA to withdraw public funding for this failed and unambitious scheme that damages the future of Newcastle United and the city centre. All key parties involved must now sit down with Newcastle United, the landowner, and the city council to find the right solution that works for Newcastle United and the city of Newcastle.”

Mr Tomlinson had argued vociferously against the £120m development plans as they were given approval by Newcastle City Council back in 2019.

Newcastle Central MP Chi Onwurah has also been a major opponent of the project and wrote to North of Tyne mayor Jamie Driscoll before Tuesday’s meeting to urge him to block the £3.5m funding agreement.

Afterwards, the Labour MP said: “I am pleased no sign off has been given on this use of public funds for a private sector development opposed by many of my constituents and which would negatively impact Newcastle United and the city skyline. I hope the NTCA will decide not to spend public money in this way when the decision returns.”

Mr Driscoll said at the NTCA cabinet meeting that there were “economic ramifications that don’t stack up” with the scheme and told the LDRS that the viability of the development, rather than football or public opinion, was behind the decision to not to proceed with the funding award on Tuesday.

While the plans were granted approval in 2019, work has stalled since then. Previous developer High Street Group fell into administration and the project is now led by investment group Reditum Capital.

Ahead of Tuesday’s decision, an NTCA report had claimed that the development would support more than 1,700 construction jobs and put £670m into the regional economy within 10 years.

It was said that the project, which includes 328 flats, an office block, and a 213-bedroom hotel, had a funding gap “caused by site remediation and high abnormal costs”.

Representatives of the developers, Strawberry Place Developments Ltd, have been approached for a comment.