The former Typhoo Tea factory in Digbeth is to be turned into a new university campus bringing together academics and businesses.
They stopped making teabags at the historic building on the corner of Bordesley Street and New Canal Street in 1978.
But now it’s due to be converted into a “creative innovation centre” managed by Birmingham City University, thanks to a £14 million government grant.
The project is called STEAMHouse and it aims to create 10,000 jobs and support local, national and international creative businesses to regenerate Digbeth as a centre of innovation.
Business Secretary Sajid Javid, the MP for Bromsgrove, welcomed the announcement as he visited the site.
And he said the funding, announced in the Budget statement this week, was part of the Government’s economic plan for the Midlands, which it calls the Midlands Engine.
The Typhoo site was one of Birmingham’s most prominent landmarks for decades, with tea production continuous from the 1930s until its closure by then owners Cadbury Schweppes in the late 1970s.
The factory, well known for its predominantly Irish workforce, enjoyed a proud industrial history in Birmingham, surviving bombing by the Luftwaffe in the Second World War.
Founded in 1903 by Birmingham grocer John Summer, Typhoo merged with Schweppes in 1968 and the Digbeth factory closed in 1978.
Other Budget measures include a £250 million fund to help small businesses, called the Midlands Engine Investment Fund.
And a new transport authority created by local councils, called Midlands Connect, will be officially recognised by the Government with legal backing.
Mr Javid said: “Driving growth in the Midlands is a key part of the government’s devolution revolution.
“There are almost 96,000 more businesses now than in 2010, the equivalent to 52 opening every day. The new £250 million Midlands Engine Investment Fund will go further by backing even more growing businesses and creating thousands of new jobs throughout the region.
“This week’s Budget drives forward the government’s vision for the Midlands Engine, and commits to supporting the development of Midlands Connect’s long-term transport strategy and the region’s traditional strengths in manufacturing and engineering.”
Chancellor George Osborne has also announced a new Enterprise Zone at Brierley Hill, in Dudley. This means that businesses in the area will get tax breaks, in an attempt to attract investment and create jobs.
Local manufacturers welcomed the announcements.
Richard Halstead, Midland and East Region Director at the EEF, the body representing manufacturers, said: “This investment in the Midlands Engine sends a very positive message to the region and to its hard working businesses.
“It is especially welcome at a time when manufacturers need support and investment to help them grow and diversify, particularly those exposed to the oil and gas and steel sectors.
“There is also strong recognition here of the importance of smaller businesses.”
However, other business organisations including the Chambers of Commerce in Birmingham and the Black Country have accused the Chancellor of ignoring the Midlands and investing in the North of England instead.