Sir Keir Starmer’s promise to make Britain an artificial intelligence “superpower” has suffered its most embarrassing setback yet after OpenAI quietly shelved its flagship Stargate UK data center project, clearly citing ruinous industrial energy prices and a muddled copyright regime.
The ChatGPT developer confirmed Thursday that it is pausing the program, which was unveiled to great fanfare during President Trump’s state visit last September. Stargate UK was supposed to be the crown jewel in a package of American technology commitments worth £31 billion, which also included £22 billion from Microsoft and £5 billion from Google. Tellingly, OpenAI has never put a number on its own promise.
The project, built in collaboration with chip giant Nvidia and London-based Nscale, was sold to ministers as a “big step” towards building sovereign UK computing capacity. In the first quarter of this year, approximately 8,000 GPU units were initially deployed and then scaled to approximately 31,000 chips. Sam Altman (pictured), CEO of OpenAI, had spoken about OpenAI’s potential to boost scientific research, increase productivity and boost economic growth – the very metrics on which the Labor government has staked its credibility.
For the hundreds of thousands of small and medium-sized British businesses that look to AI as a route to efficiency and competitiveness, the decline is more than symbolic. Without domestic computing power at scale, SMBs risk being pushed even further in the queue behind American and European competitors that can tap into cheaper, tighter infrastructure.
Sam Richards, chief executive of pro-infrastructure campaign group Britain Remade, didn’t mince his words. He described the pause as a “clear warning” that construction in Britain would be prohibitively expensive, and argued that no country saddled with some of the highest industrial electricity tariffs in the developed world could credibly call itself an AI superpower. Investors, he warned, would simply take their checkbooks elsewhere.
An OpenAI spokesman insisted the company remained true to its policy and said it would move forward with Stargate UK once “the right conditions” around regulation and energy costs allow for real long-term infrastructure investment. London, the spokesman said, remains the company’s largest international research center and OpenAI continues to expand its local workforce and introduce groundbreaking AI tools in the public sector.
However, behind the diplomatic language lies a clearer resentment. OpenAI made it clear that the government’s U-turn on copyright reform was a key factor in their decision. The company had aggressively pushed for a rule that would have allowed AI developers to absorb copyrighted material to train their models unless the rights holders explicitly opposed it. After a fierce backlash from writers, musicians, publishers and much of the wider creative industry, ministers have scrapped the proposal and now insist they have “no preferred option” moving forward.
While the original Stargate announcement targeted the UK chip cluster at “specific use cases” in the public sector, regulated industries such as financial services, academic research and national security, OpenAI specifically avoided any reference to training models on UK soil. The company has now admitted that it wanted the “freedom and opportunity” to use those local capabilities as it saw fit – a euphemism, critics will say, for the very training activity at the heart of the copyright dispute.
However, the economic aspects of the decision are more difficult to estimate. Hyperscale data centers are voracious consumers of electricity, and the UK continues to burden large industrial customers with some of the highest electricity prices in the OECD. For a sector where marginal costs determine where the next gigawatt of capacity will end up, the UK’s energy bill is becoming an increasingly difficult sell in Silicon Valley boardrooms.
A Whitehall spokesman said the government was continuing to work with OpenAI and other leading AI firms “to strengthen the UK’s computing capacity”, although officials privately acknowledged that optics were fading.
The withdrawal also comes with a broader tightening of focus within OpenAI itself. The company, valued at a staggering $852 billion in its most recent capital raising, is expected to push the button on a blockbuster initial public offering later this year and has been busy jettisoning what insiders call “side hustles.” In recent weeks, the company has shut down its Sora video-generating app, scrapped plans for an adult chatbot and quietly abandoned an experiment in e-commerce.
Nscale declined to comment. Nvidia had not responded to a request for comment at the time of writing.
For the UK economy, the message is uncomfortably clear: without urgent action on energy costs and clear regulation, the much-vaunted AI gold rush could pass these shores.
