The Government is to give Birmingham City University £14m to transform the former Typhoo tea factory into a collaborative innovation centre for solving the challenges facing SMEs in the West Midlands region.

Business Secretary Sajid Javid, visited the site last week to see first-hand how the funding will support the development of the Government’s Midlands Engine, with the University’s STEAMHouse project driving the creation of up to 10,000 jobs and regenerating Birmingham’s long-neglected Digbeth area.

Javid said: “Today we’re here to mark the investment in this exciting new STEAMhouse project. It’s a project between universities, the creative industries, which the Midlands is very well known for, and also businesses – all working together to create a new innovation centre, which will then lead to new discoveries, new work and new jobs. The estimate is that it could eventually create 10,000 jobs.”

The first phase of the scheme will be delivered in partnership with Eastside Projects and see the creation of a new production space and workshop for artists.

Birmingham City University Pro-Vice-Chancellor, Professor Julian Beer, said the investment would have a huge impact on the city, economically and physically:

“Through this investment Birmingham City University is continuing its role in regenerating the Digbeth area of the city, an area of enormous untapped economic and social potential.

“STEAMHouse aims to promote growth and job creation by forming clusters of businesses, academics, artists and local communities, similar to that seen in London’s Shoreditch and Kings Cross. Unlike the hugely successful Tech City in Shoreditch, however, STEAMHouse will focus on how the creative arts – rather than science and technology alone – can lead the way in solving the problems facing small businesses.”

The University and Gooch Estates propose to partner to deliver the redevelopment of the currently derelict tea factory which will see the creation of space for STEAMHouse and a range of co-working, artist production, incubation and networking facilities.

The development is in part a response to a range of reports which indicate that small businesses across the West Midlands are lagging behind on collaborative innovation. By linking academic research and the vibrant creative arts scene in Digbeth, the University hopes to develop a new supply chain across the region.

The news of Government support comes just a month after the Arts Council injected £500,000 into the STEAMHouse initiative through its Creative Local Growth Fund, which will be matched by the European Regional Development Fund.

The Midlands Engine Investment Fund has been secured by the region’s Local Enterprise Partnerships and the British Business Bank to support small and medium sized businesses.

The investment also promises to accelerate the development of the city’s Knowledge Hub, which brings together a host of education providers across the West Midlands to develop the skills and infrastructure needed for economic growth.

Dawn Ashman, Director Creative Industries and Birmingham, Arts Council England, said: “Arts and culture play a vital role in Birmingham and across the Midlands, enriching people’s lives and fuelling the region’s creative industries. That’s why we’ve been investing in the development of STEAMHouse through our Grants for the arts and Creative Local Growth fund.

“It’s a fantastic example of how the Arts Council’s funding can support individual artists to take an ambitious idea and make it a reality. The £14 million investment announced for STEAMHouse by the Chancellor is a major vote of confidence for the project and the role of culture and creativity in driving economic growth.”