A multibillion-pound drive to \u201cmainline AI into the veins\u201d of the British economy is riddled with \u201cphantom investments\u201d and shaky accounting, a Guardian investigation has found.<\/p>\n
Since 2024, successive Conservative and Labour governments have proclaimed massive deals to build new datacentres, create thousands of jobs and construct a supercomputer.<\/p>\n
The investments \u2013 led by two firms linked to AI giant Nvidia – have been touted as a cornerstone of the government\u2019s promise to use tech to turbocharge the economy.<\/p>\n
On Monday, former UK deputy prime minister Sir Nick Clegg and former Meta chief operating officer Sheryl Sandberg were announced as new board members at one of the firms, NScale. Nscale also said it had raised a $2bn funding round, sending its valuation soaring to $14.6bn.<\/p>\n
But a Guardian investigation has shown the money isn\u2019t necessarily real, the datacentres may not be new, the jobs are unaccounted for \u2013 and the supercomputer site 12 miles north of London is still a scaffolding yard.<\/p>\n
The Alandale scaffolding yard in Loughton, Essex. Photograph: Martin Godwin\/The Guardian<\/p>\n
When asked about a series of claimed investments, the UK\u2019s Department for Science, Innovation and Technology declined to answer detailed questions but said it \u201crejected these assertions\u201d.<\/p>\n
A statement added: \u201cOur AI sector has attracted more than \u00a3100bn in private investment since the government took office, with our AI sector growing 23 times faster than the wider economy last year. That is delivering the jobs and opportunities hardworking people deserve.\u201d<\/p>\n
But it also acknowledged limitations to its oversight.<\/p>\n
In one case, it said that there was no contract in place for a \u00a31.9bn ($2.5bn) investment despite a press release declaring that one had been signed. In another, it said that it was \u201cnot playing an active role in auditing these commitments\u201d.<\/p>\n
The findings raise questions about a series of massive AI investments announced globally in the past year, many in high-level press releases from governments and tech companies.<\/p>\n
With over \u00a3500bn promised in 2025, countries worldwide are seeking to conjure economic growth from AI\u2019s transformative potential.<\/p>\n
Last year, the UK prime minister, Keir Starmer, said that<\/a> if AI were \u201cfully embraced\u201d, it could bring \u00a347bn to the economy each year \u2013 and promised to \u201cmainline AI<\/a> into the veins of the UK\u201d.<\/p>\n Starmer unveiling the government\u2019s \u2018AI opportunity action plan\u2019 at University College London (UCL) East in January 2025. Photograph: Henry Nicholls\/PA<\/p>\n But the UK example will raise fears that, without oversight, the value of these investments may simply enrich companies and investors that are largely headquartered in the US.<\/p>\n \u201cThese are phantom investments,\u201d said Cecilia Rikap, a professor of economics at University College London, who said similar things were happening around the world.<\/p>\n \u201cBig tech companies artificially inflate datacentres\u2019 job creation and economic impact to please governments like the British one, which are desperate to claim they are making the economy grow.\u201d<\/p>\n \u2018The rules are very flexible\u2019<\/p>\n The UK government\u2019s AI plans centre on two companies backed by the $4tn tech giant Nvidia: London-based Nscale and the US company CoreWeave.<\/p>\n In 2024, Rishi Sunak\u2019s government hailed one of the first AI investments in Britain, a \u00a31bn commitment from CoreWeave to help \u201ccement the UK\u2019s position as a world leader in AI.\u201d<\/p>\n Sunak at the AI Safety Summit in Milton Keynes in November 2023. Photograph: Reuters<\/p>\n CoreWeave\u2019s press release said it would invest \u00a31bn in the UK, and quoted the then technology secretary, Michelle Donelan, as saying this would bring \u201ctwo new datacentres to our shores.\u201d<\/p>\n CoreWeave said the investment would \u201ccreate job opportunities\u201d and herald further expansion. Six months later, it announced that the two datacentres were operational: one in London Docklands, and one in Crawley near Gatwick.<\/p>\n Planning records indicate that CoreWeave built no new datacentres at either location during that time period. Neither did the two partners mentioned in its press release.<\/p>\n In fact, while CoreWeave\u2019s \u2013 and the government\u2019s \u2013 communications imply that physical buildings were built by suggesting the investment would bring \u201ctwo new data centres to our shores\u201d<\/a>, this was misleading.<\/p>\n Michael Intrator, co-founder and chief executive of CoreWeave, speaking in New York in February. Photograph: Brendan McDermid\/Reuters<\/p>\n The Guardian understands that CoreWeave became a customer of two existing datacentres, one built in 2002 and one built in 2015, both of which lease space to a host of other companies, including Google and Fujitsu. CoreWeave rented space in these datacentres, and deployed Nvidia chips that it had paid for.<\/p>\n Effectively, its investment amounts to the relocation into the UK of computer chips manufactured in Taiwan by a US company.<\/p>\n There is no indication in public-facing materials that CoreWeave has made other investments, beyond renting an office in a building in Southwark, London, which it has called its \u201cEuropean headquarters.\u201d<\/p>\n Rikap said it was \u201cvery common\u201d for datacentre developers to frame the purchase of equipment, or the acquisition of other companies, as investment. \u201cThe rules are very flexible and help them to make these big claims and investments that a government like Starmer\u2019s, which is desperate for good news, can use for their favour.\u201d<\/p>\n In a response to a query from the Guardian, the government said that the figures it had announced for CoreWeave\u2019s investment did not come from them. A statement said they were produced by CoreWeave.<\/p>\n It did not say whether this investment amounted to capital or equipment.<\/p>\n CoreWeave said that bringing new datacentre capacity online by deploying chips within an existing site was an \u201cindustry-standard\u201d approach. The deployment of these chips, the associated lease and power costs, the opening of its office and personnel costs represented the whole of the \u00a31bn investment, it said.<\/p>\n \u201cOur investments are designed to expand compute capacity, and enable AI adoption and innovation across enterprises, research institutions, the public sector and startups. We are delivering advanced, purpose-built AI infrastructure to support the development of AI at scale,\u201d the company said. It refused to say how many jobs had been created.<\/p>\n Nscale\u2019s flagship project was announced in January 2025, when the government said that the company would build a supercomputer site on the outskirts of Loughton in east London, a project dubbed \u201cthe largest UK sovereign AI datacentre.\u201d This was reported to be part of a $2.5bn investment the company was making into the UK.<\/p>\n