Plans for a second phase at Coppergate, York have been in gestation for more than a decade, and the proposal was the subject of a lengthy public inquiry last year.

But the developer's chief executive of development Francis Salway vowed to persevere with the scheme. "We are disappointed with the decision but believe that the case for further retail space in York has been proven," he said. "In these circumstances we believe that we now have an opportunity to reflect on the inspector's conclusions, and work closely with York City Council, English Heritage, the local community and others to develop a process to allow us to move forward from here."

Salway pointed that Land Securities had overcome similar planning setbacks in Exeter, giving it hope that it could successfully revise its York proposals. And he noted: "While this is a setback for us, our current holdings in the site provide a high income yield and our overall investment to date in the scheme is small.