Huge £31billion investment in Britain is pulled over Labour's red tape and 'mad Net Zero agenda'

Peter Stevens
Fri, 10 Apr 2026 05:28:02 +0000

A £31billion investment in Britain has been pulled because of high energy costs and Labour's red tape.

The project, named Stargate UK, was intended to build a large data centre in northeast England and make thousands of powerful chips for AI development.

OpenAI, behind the massive investment push, has now said it will only move forward with the cash when the "right conditions" in the UK are in place.

At the moment, regulation and energy costs left "long-term infrastructure investment" off the table, it warned.

In a statement, the AI firm said: "We see huge potential for the UK's AI future. London is home to our largest international research hub, and we support the government's ambition to be an AI leader.

TRENDING

Stories

Videos

Your Say

"AI compute is foundational to that goal - we continue to explore Stargate UK and will move forward when the right conditions such as regulation and the cost of energy enable long-term infrastructure investment."

Tory Shadow Business Secretary Andrew Griffith laid the blame at Energy Secretary Ed Miliband's door.

He told the Mail: "Ed Miliband's suicidal energy policy has just cost us another huge investment.

"The UK has top AI talent and labs but ruinously high energy costs because of Labour's mad Net Zero agenda.

"If Labour let us fall behind on AI, Britain will lose even more jobs for young people."

Stargate UK was set to boost Britain's "sovereign compute capabilities" in order to deliver on Labour's AI "Opportunities Action Plan".

Sovereign compute would have allowed AI models to run on local computing power for projects with British security concerns, such as critical public services, regulated industries like finance, research projects and national security partnerships.

The data centre was expected to be based across a number of sites - including Cobalt Park in North Tyneside - and would be part of the Government's "AI Growth Zone" in the North East.

The project could have expanded further, but Britain's industrial energy prices, which are more than double those paid by US manufacturers, have shut this down.

BRITAIN UNDER LABOUR - READ MORE:

Labour's 'disastrous' tourist tax risks ruining holidays for families, Butlins' boss warns

Leon declares 'the high street is dead' as Labour ‘kills the restaurant industry' with tax burden

Rachel Reeves putting 25,000 jobs at risk as £939million business raid triggers industry fears

Shadow Chancellor Sir Mel Stride said the investment pull was a result of Chancellor Rachel Reeves's "economic mismanagement".

He said: "Britain should be leading the AI revolution. Instead, Labour are delivering high costs and lost opportunity.

"The message to investors is clear, under Keir Starmer, Britain isn't open for business."

Julian Jessop, an economics fellow at the Institute of Economic Affairs think tank, said Mr Miliband's "mad dash to decarbonise" was the "final straw" which resulted in OpenAI pulling its investment.

This is not the first time and AI investment in Britain has not be followed through.

Last month, it was revealed that a supercomputer set to open in 2026 was sitting incomplete in a scaffolding yard in Essex.

When Stargate UK was announced in September, OpenAI's CEO and co-founder Sam Altman said AI could expand UK's economy for both people and businesses.

"The UK has been a longstanding pioneer of AI, and is now home to world-class researchers, millions of ChatGPT users, and a government that quickly recognised the potential of this technology," he said.

"Stargate UK builds on this foundation to help accelerate scientific breakthroughs, improve productivity, and drive economic growth."

A Government spokesman said the UK's AI sector had attracted more than £100billion in private investment and was delivering jobs and opportunities for workers.

He said: "Our focus is on continuing to create the right conditions for investment in the UK's AI and data centre infrastructure.

"We are continuing to work with OpenAI and other leading AI companies to strengthen UK compute capacity."