OpenAI has paused its Stargate UK scheme, halting plans for a data centre at Cobalt Park in North Tyneside that had been presented as part of a wider £31bn technology agreement. The company said high energy costs and regulation were behind the decision, and said it would proceed only when the “right conditions” could “enable long-term infrastructure investment”.
The project had been announced last September as part of efforts to strengthen the UK’s “sovereign compute capabilities” and support domestic Artificial Intelligence development. The North East Combined Authority said the pause was disappointing but argued it reflected national issues rather than any weakness in the region. It said the North East remained “open for business” and would continue working with government to remove barriers to the project. The authority also said the region remained one of the UK’s designated Artificial Intelligence Growth Zones, with strong assets in power, land, skills and applied innovation.
Chi Onwurah, chair of the Science and Technology Committee and MP for Newcastle Central and West, described the decision as a “blow”. She said the plan had been “very long on ambition and short on detail” when it was announced in September alongside President Donald Trump’s state visit. While backing the government’s push to use Artificial Intelligence and technology innovation as drivers of economic growth, she said the UK’s reliance on US investment was “too great”.
Onwurah said the Labour government had “already moved to reduce energy costs for energy-intensive industries such as AI” but argued further action was needed. She also said “there are certainly some problems in the Open AI business model, and also the energy spike as a consequence of the Iran war is a global energy increase”. In response to the broader investment picture, a government spokesperson said the UK’s Artificial Intelligence sector had attracted more than £100bn in private investment since Labour came into office, and said this was creating jobs and opportunities for workers.
