NEW homes and around 250 jobs are set to be created in Burnley after plans to transform a derelict mill were given the green light.

The former Lambert Howarth mills, in Finsley Gate, will be partially demolished to make way for 18 new townhouses on the banks of the Leeds Liverpool canal.

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And Birmingham-based developers St Modwen said it would bring forward £20million plans for 149 homes on the adjacent canalside.

The former mill has remained derelict for the past two years.

Work is due to start in the new year with the removal of the mill extension and the restoration of the original Finsley Gate Mill and landmark chimney for future commercial use. This could provide a new restaurant opportunity for the town, bosses said.

A new public space will be created with a footbridge over the canal, mirroring the walkway created from Victoria Mill to Sandygate, further along the waterway.

The development, which incorporates both Finsley Gate and Healey Royd mills, has been under discussion since at least 2011 and has been broadly welcomed.

Borough council leader Coun Mark Townsend is hopeful it will trigger extra investment along the former cotton heartland corridor.

He said: “This is absolutely fantastic news as this site has been an eyesore for many years.

“It is just another example of Burnley being on the up and that area along the canal has been a really big draw for developers.”

Mike Cook, the borough council’s economic regeneration director, said: “The planning approval for St. Modwen’s proposals is an important step toward transforming this area of the canal.

“The St Modwen plans for the former Finsley Gate Mill will transform this area of the canal and complement the On The Banks development also underway within the Weavers’ Triangle.”

Further examination of the Finsley Gate mill chimney has found that the top 15 metres is unstable, so it is proposed that this will be taken down and the remaining 33 metres reinstated.

St Mowden bought Finsley Gate Mill, which dates back to 1820, and Healey Royd Mill, from shoe-maker Lambert Howarth in 2005.

Steven Knowles, St Modwen’s development director, said: “The planning consent is an important step forward for Burnley and will bring in new job opportunities and investment into the town.

“The scheme will bring forward new homes to Burnley and will act as a catalyst for the regeneration of the wider area.”

English Heritage did express some initial concerns over the loss of parts of the mill site but their conservation concerns were allayed after a number of meetings.