Ed Balls calls for plan B after Tesco pulls out of Wolverhampton store plan

But it can be revealed that Tesco will continue to work on bringing the Royal Hospital into a saleable condition until March, despite abandoning its own project to kit it out.

Meanwhile Labour's shadow chancellor Ed Balls has called on the firm to work with Wolverhampton City Council on a 'Plan B'.

Wolverhampton City Council was left reeling when the troubled supermarket announced it was pulling out of the Royal Hospital site 14 years after first taking it on.

The council's Labour leader Roger Lawrence said he was set to meet Tesco property executives next week to discuss the next steps.

He said: "I have asked Tesco for a picture of where they are at the moment with the various works they have been carrying out.

"They are going to continue to work on building until March and are putting it into a sound structural condition.

"The building was previously in a very bad way.

"But Tesco have done roofing work and dealt with subsidence.

"It won't be kitted out but it will be in a much better condition for whoever takes it on than it was for Tesco.

"They must be taking a hit for millions on this.

"Tesco are coming to see us next week and will discuss options."

Councillor Lawrence said he was hoping to see the sight used for housing, non-food retail or possibly leisure.

But he said: "I don't know if with the food retail market the way it is we will find anyone who wants to take on the existing planning permission."

Mr Balls said: "It's not for Government to underwrite private projects that go wrong. The supermarket world has been very competitive. Tesco is clearly under pressure. They have a history being a strong company. They have to make their decisions but I don't see why the people of Wolverhampton should be short changed. If Tesco aren't going to provide the jobs then people need to get around the table and working out Plan B."

Councillor Wendy Thompson, leader of the Conservative group in Wolverhampton, said: "We have to move this on.

"It has taken far too long as it is and now there is very little to show for it."

UKIP councillor Malcolm Gwinnett added: "I warned them years ago this would not happen.

"The council should have been talking to Tesco about alternative options to give them a get out clause.

"The site needs to become housing. That's what we badly need in Wolverhampton."

Wolverhampton South East MP Pat McFadden accused Tesco of a 'betrayal of the people of Wolverhampton and a clear breach of the promise made to the people of the city'. It follows assurances given last year by Tesco that the project would go ahead.

Tesco has abandoned the construction of 49 large supermarkets in the wake of the accounting scandal which exposed a £263 million hole in expected profits.