THE biggest development in Edinburgh's Old Town since the 12th century has taken a massive step forward, after the city's top planning official comprehensively backed the controversial Caltongate plans.

Alan Henderson urged councillors to support the development, which includes a five-star hotel, a conference centre and 200 homes a stone's throw from the Royal Mile.

However, the project may yet be passed to Scottish ministers for final approval after a stream of objections, ranging from residents to the Edinburgh World Heritage Trust, set up to protect the city's UNESCO heritage site.

Mr Henderson listed a string of benefits from the Caltongate development in his report. They included an increase in affordable housing, regeneration of a brownfield site, jobs and investment, and keeping the Royal Mile's historic façades, though buildings would be demolished.

He recommended a new CCTV scheme and a contribution of £120,000 to the £600 million tram scheme.

Mr Henderson said the development boosted the capital's economic competitiveness.

MSPs are likely to back the plan, to prove they favour the modernisation of Scotland, according to one supporter.

"I think the Parliament is keen to show that carefully considered and discussed projects do happen," he said. "It is very unlikely they would kick it into touch."

However, there have been hundreds of objections lodged against the £300 million Caltongate development. Some compromises have been made, such as scaling down the site's access to the Royal Mile to a more modest arcaded entrance. A new architect's firm, Page/Park, with a reputation for sensitive handling of protected sites, has also been brought on board.

But the demolition of two listed buildings is still bitterly opposed. Councillor David Beckett, a city-centre SNP councillor who is not on the planning committee, said: "I just feel it's not in keeping with the Old Town's character. It's really quite an insensitive project."

The developers, Mountgrange, have filed 12 separate applications for the 3.5-acre site, including office and apartment blocks, cafés and restaurants. A new "culture quarter" is promised, with music venues and artists' studios.

The planning committee includes five Liberal Democrat members, three Labour, three Conservative, three SNP and one Green member.

The Lib Dem leader of the council, Jenny Dawe, attacked the Caltongate designs last May. In the parliament, Shirley-Anne Somerville, the SNP MSP for Edinburgh Central, has raised similar concerns to Mr Beckett about the development. But the First Minister, Alex Salmond, has signalled his support in the past for projects like Donald Trump's golf resort and hotel.

A council spokeswoman said of Mr Henderson's report: "This is just a recommendation from planning officials based on the information they have collected. It does not mean that the committee will follow. It doesn't mean that anything is cut and dried."

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