OpenAI has put on hold plans for a landmark UK investment, known as Stargate UK, citing high energy costs and regulatory uncertainty. The decision is a blow to the Labour government, which has positioned artificial intelligence at the centre of its growth strategy.
Stargate UK was part of a UK-US AI deal announced last September, with US companies appearing to commit £31bn to the UK’s tech sector. The project aimed to support Britain in building 'sovereign compute' infrastructure, allowing the government and UK institutions to run AI models on domestic datacentres, crucial for data security.
Critics have pointed to the government's lack of an economic strategy. Liberal Democrat MP Victoria Collins called the shelving 'a wake-up call for the government to manage energy costs and foundation infrastructure'. Labour MP Clive Lewis said the government was 'desperate to project momentum, willing to dress up press releases as policy'.
A Guardian investigation last month revealed many of the deals were 'phantom investments'. A supercomputer scheduled to go live in 2026 was still a scaffolding yard in Essex, built by Nscale, a UK firm that had never built a datacentre before. Nscale was also to build key datacentres for Stargate UK.
OpenAI said it would wait for 'the right conditions' to enable 'long-term infrastructure investment'. A government spokesperson countered that the UK's AI sector had attracted over £100bn in private investment since the government took office, and that they continued to work with OpenAI to strengthen UK compute capacity.
Shadow science minister Ben Spencer said: 'When global firms cite high energy costs and regulatory uncertainty as reasons to walk away, it tells you everything about the direction of travel.' Tom Hegarty of Foxglove noted OpenAI CEO Sam Altman's 'record of U-turns', but added that ministers had 'jumped fully aboard the AI hype train'.
