Data centre pause 'reflects national challenges'

The pausing of a scheme to create a data centre aimed at boosting the country's AI infrastructure is "disappointing" but "reflects national challenges around energy pricing", local political chiefs say.

ChatGPT-maker OpenAI announced on Thursday it was halting its Stargate UK scheme, which would have included the data centre at Cobalt Park in North Tyneside among a wider £31bn technology agreement.

It cited concerns about high energy costs and regulation, saying it would only move forward when the "right conditions" could "enable long-term infrastructure investment".

The North East Combined Authority (Neca) said the region remained "open for business".

When the data centre project was announced last September, OpenAI said it would help strengthen the UK's "sovereign compute capabilities" and bolster its native AI development.

North East mayor Kim McGuinness, of Labour, was approached for comment but was unavailable.

Instead, a spokesperson for Neca told the BBC political leaders retained a focus on securing jobs and investment.

"It is disappointing news that this is on hold, but it reflects national challenges around energy pricing and regulatory certainty rather than the strength or ambition of our region.

"However, we will continue to work with government to explore ways to remove the barriers and ensure this can move forward.

"The North East remains one of the UK's designated AI Growth Zones, with strong assets in power, land, skills and applied innovation, and our direction has not changed."

MP Chi Onwurah, chair of the Science and Technology Committee, had earlier described the news as a "blow".

Speaking to BBC Radio 4's Today programme on Friday, Onwurah, who represents the Newcastle Central and West constituency within a few miles of the Cobalt Park site, said the plan had been "very long on ambition and short on detail" when it was announced in September to tie in with President Donald Trump's state visit.

She said while she backed the government's move to use AI and technology innovation as "key drivers of economic growth", she believed the country's dependency 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 more needed to be done.

However, she added "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".

Following the announcement on Thursday, a government spokesperson said the UK's AI sector had attracted more than £100bn in private investment since Labour came into office, and this was delivering jobs and opportunities for workers.

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