UK's AI Investment Drive Built on 'Phantom' Projects and Unverified Claims
A multibillion-pound government initiative to "mainline AI into the veins" of the British economy is riddled with "phantom investments" and shaky accounting, according to a Guardian investigation. The ambitious drive, championed by both Conservative and Labour administrations, has been touted as a cornerstone of the UK's strategy to harness technology for economic growth.
Scaffolding Yard Masquerading as Supercomputer Site
One of the most striking examples is a proposed supercomputer facility in Loughton, Essex, which remains a functioning scaffolding yard despite being announced as part of a $2.5 billion investment by the AI firm Nscale. The site was promoted in January 2025 as "the largest UK sovereign AI datacentre," with completion expected by the end of 2026. However, when visited in February, the location was still occupied by a London-based scaffolding company.
Nscale submitted a planning application only after Guardian inquiries began, and land records suggest the company may not yet own the site. The UK Department for Science, Innovation and Technology acknowledged that Nscale's $2.5 billion commitment was "not a formal contract, rather an intention to commit capital," and might include equipment and funding rather than physical construction.
Rented Datacentres and Inflated Job Claims
Another key player, CoreWeave, announced a £1 billion investment in 2024 to build "two new datacentres" in the UK, with then-technology secretary Michelle Donelan hailing it as a move to "cement the UK's position as a world leader in AI." However, planning records indicate no new datacentres were constructed. Instead, CoreWeave rented space in two existing facilities—one built in 2002 and another in 2015—that also host companies like Google and Fujitsu.
CoreWeave's investment essentially involved relocating Nvidia chips manufactured in Taiwan into the UK, along with leasing an office in Southwark, London, designated as its "European headquarters." The company described this as an "industry-standard" approach but refused to disclose how many jobs were created. The government admitted the £1 billion figure came from CoreWeave itself and did not clarify whether it represented capital or equipment expenditure.
Government Oversight and Accountability Gaps
The investigation raises serious questions about the oversight of these AI investments. The Department for Science, Innovation and Technology stated it was "not playing an active role in auditing these commitments" and rejected assertions of phantom investments. It highlighted that the UK AI sector attracted over £100 billion in private investment since the government took office, growing 23 times faster than the wider economy last year.
However, the department conceded limitations, noting there was no contract for a £1.9 billion investment despite a press release claiming one had been signed. Professor Cecilia Rikap of University College London criticized the situation, stating, "Big tech companies artificially inflate datacentres' job creation and economic impact to please governments like the British one, which are desperate to claim they are making the economy grow."
Future Projects and Unverified Promises
Both Nscale and CoreWeave are involved in further projects. Nscale, alongside Microsoft and OpenAI, plans to develop Stargate UK, aimed at enhancing the country's AI facilities. The government confirmed this is part of Nscale's $2.5 billion investment but provided no breakdown or audit mechanism.
CoreWeave is backing an AI growth zone in Lanarkshire, Scotland, projected to bring its total UK investment to £2.5 billion and create 3,400 construction jobs. The site currently hosts a datacentre with 24MW of electricity, far below the promised 1GW of renewable energy. Dr. Kat Jones of the Scottish charity APRS dismissed the renewable energy claims as "total pie-in-the-sky," questioning their feasibility.
When asked about the Lanarkshire commitment, the government said details were "ultimately" up to CoreWeave and its partner DataVita, which did not respond to requests for comment. CoreWeave shifted responsibility for job projections to the government and DataVita, stating any figures originated from them.
Broader Implications for Global AI Investments
The findings extend beyond the UK, casting doubt on massive AI investments announced globally in the past year. With over £500 billion promised in 2025, countries worldwide are racing to capitalize on AI's transformative potential. Prime Minister Keir Starmer has emphasized that fully embracing AI could add £47 billion annually to the economy, but the UK example highlights risks of inadequate oversight.
Professor Rikap warned that without proper scrutiny, such investments may primarily benefit US-based companies and investors, rather than delivering tangible economic growth. The government maintains a firm stance, with a spokesperson asserting, "We have a clear plan to deliver the infrastructure the UK needs and get it connected, and make no apologies for working with leading global firms to invest in and build datacentres here."
As the AI boom continues, the investigation underscores the need for transparency and rigorous auditing to ensure public investments yield real-world benefits, rather than remaining phantom promises on paper.
