Many strategies have been attempted to regenerate England’s post-industrial towns, from museums to indoor ski slopes and railway stations.

Rochdale, part of Greater Manchester, has had a radical idea: a global centre of excellence for machine tool design. The former cotton spinning and engineering centre believes it can revitalise its heritage to create the jobs and companies of the future.

“We are going to answer the question, ‘can innovation level up a town?’” said Neil Eccles, from the Rochdale Development Agency, the north-west local authority’s economic arm.

The 20th most deprived town in England, Rochdale has received £23.6m from the government’s “Towns Fund”, a £3.6bn pot of money aimed at improving “left-behind” areas as part of Westminster’s attempts to level up prosperity across the country.

Some £15m of this funding will go towards building the Advanced Machinery and Productivity Institute in Rochdale. It is the kind of institution that is normally built in a city that has the critical mass of expertise and companies to exploit it.

The AMP Institute will work with companies and universities to create new machines and technologies needed in the manufacturing industry.

Pedestrians wearing facemasks walk through central Rochdale

It is a different approach to that being used by other Towns Fund recipients, which have prioritised cosmetic improvements, restoring buildings or adding cycle paths.

Rochdale, a borough of 224,000 people, also stands out because it is Labour-voting, although it includes parts of Heywood and Middleton, which switched to the Conservatives at the last election. The Conservative government has been criticised for using the Towns Fund to target marginal seats in the 2019 general election.

Eccles said: “Does a vibrant high street create a vibrant business environment or does a vibrant business environment sustain a vibrant high street? We think it is the latter. If you have good, well-paid jobs, people will have money to spend in the town.”

Rochdale’s manufacturing heart was almost eviscerated as the cotton mills and factories lost out to cheaper competition from Asia starting in the 1970s. But the companies that survived are among the most competitive in the world.

“We think we are the only town that will have a development like this,” said Paul Simkiss, a local businessman who chairs the board that made the bid for the Towns Fund money. “It is great that the place has embraced it as well as the industry.”

The National Physical Laboratory, a government body, has provided £50,000 in seed funding. It is now backing Rochdale’s bid for £22.6m from government research arm Innovate UK to provide staff and deliver innovation programmes at the institute.

The Greater Manchester combined authority is expected to provide another £15m as part of its plans to rejuvenate satellite towns, where job creation in recent years has been much more lacklustre than in the city itself.

The AMP Institute will have seven staff members and create about 20 positions at the nearby universities of Salford and Huddersfield, which are collaborating with it. It hopes to generate 660 direct jobs and 530 indirect roles at companies across the region as a result of the technology it develops, primarily though sharing equipment and software that many small to medium-sized businesses could not afford. It will also help them with knowhow and patent protection.

More than 40 companies are already supporting the institute. As the cluster grows, it should attract more, said Tony Bannan, chief executive of local machinery maker Precision Technologies Group, who floated the idea of a centre in 2017.

The 150-year-old business, bought by a Chinese company in 2010 because of its world-leading technology, makes grinding and milling machines for the production of specialised compressor parts used in pipelines, air conditioning and elsewhere. It also makes high-precision gears and invests 15 per cent of its £30m annual turnover in research and development.

“The key thing is that this is business-led. In the UK, we are good at the research but we don’t commercialise it,” Bannan said.

New machines and robots were vital to ensuring UK manufacturers could compete internationally, he added. “We need to get some momentum in this industry, otherwise it is going to die out.”

Metro Dynamics, an economics consultancy, has said the AMP Institute should add £144m to Rochdale’s economy over five years. It could quadruple the size of the UK advanced machinery sector, creating 20,000 jobs, to match the size of the industry in Switzerland. It could also boost annual exports from £600m to £2bn and increase industrial robotics manufacturing output to £1bn per year, creating 5,000 jobs.

“It is a unique opportunity,” said Mike Emmerich, co-founder of Metro Dynamics.

Manufacturing still accounts for about 20 per cent of Rochdale’s economy, double the national average. In many towns, jobs in the sector are among the best paying.

The AMP Institute is also a test case for whether Greater Manchester can close its own north-south divide as part of a proposed £7bn programme, Innovation Greater Manchester.

While Manchester and the richer suburbs have been transformed as popular places to live and locate businesses, its surrounding mill towns have struggled.

The unemployment rate in Rochdale between October 2019 and September 2020 was 5.6 per cent, almost a third above the national average. With warehouse work being the fastest-growing sector, full-time wages in the borough are £509 a week, compared with a national average of £587.

Chris Oglesby, interim chair of the Greater Manchester Local Enterprise Partnership, an economic development body, said: “Innovation-led industries have traditionally clustered around the city centre and south Manchester and with them the creation of high-value jobs. While we want to ensure these areas can continue to thrive, a central role for Innovation Greater Manchester is stimulating the same growth in skilled jobs and new business opportunities across all areas of the city-region.”