{"id":470932,"date":"2026-03-12T05:41:12","date_gmt":"2026-03-12T05:41:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/470932\/"},"modified":"2026-03-12T05:41:12","modified_gmt":"2026-03-12T05:41:12","slug":"phantom-investment-scandal-rocking-britain-these-firms-pledged-billions-to-revolutionise-the-uk-but-a-year-on-fred-kelly-reveals-whats-really-happened-to-their-plans-and-why-one-planned-si","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/470932\/","title":{"rendered":"‘Phantom investment’ scandal rocking Britain: These firms pledged billions to revolutionise the UK… but, a year on, FRED KELLY reveals what’s really happened to their plans… and why one planned site is now a scrapyard"},"content":{"rendered":"

Last January, in a rousing speech delivered at University College London<\/a>, Sir Keir Starmer<\/a> heralded the beginning of an artificial intelligence (AI<\/a>) revolution.<\/p>\n

If \u2018fully embraced\u2019, he claimed, the new technology would pump an extra \u00a347 billion into the British economy<\/a> every year \u2013 more than 80 per cent of the Ministry of Defence\u2019s annual budget<\/a>, or almost 25 per cent of a year\u2019s NHS<\/a> spending.<\/p>\n

\u2018In a world of fierce competition, we cannot stand by,\u2019 said the PM. Paraphrasing Facebook<\/a>\u2019s now-abandoned motto \u2013 \u2018move fast and break things\u2019 \u2013 he concluded: \u2018We must move fast and take action to win the global race.\u2019<\/p>\n

An accompanying press release contained the rather odd sentence: \u2018Today\u2019s plan mainlines AI into the veins of this enterprising nation.\u2019<\/p>\n

Central to this new injection were two huge investments promised by private companies pledging to spend billions building critical new \u2018data centres\u2019 to host the powerful computers used by AI models.<\/p>\n

Rather than merely writing students\u2019 essays for them, putting people out of work or creating \u2018deepfake<\/a>\u2019 pornography, AI \u2013 thanks to these new data centres \u2013 finally looked set to deliver tangible economic benefits to Britain.<\/p>\n

A year on from Sir Keir\u2019s speech, however, a bombshell new investigation has exposed these private company pledges so far to be a sham: \u2018phantom investments\u2019 that aren\u2019t worth the paper they were written on.<\/p>\n

The two AI firms at the centre of the scandal are London-based start-up Nscale and American outfit CoreWeave. Both, incidentally, have close business ties to the monolithic, $4.5trillion AI chip-manufacturer Nvidia \u2013 currently the most valuable company in the world.<\/p>\n

\"Keir <\/p>\n

Keir Starmer delivering a speech during a visit to\u00a0the Manufacturing Futures Lab at UCL last year<\/p>\n

To coincide with the PM\u2019s speech, Nscale promised a \u00a32.5 billion investment to build a single new data centre in Loughton, Essex, while CoreWeave had previously pledged \u00a31 billion to build two new data centres \u2013 one near Gatwick Airport in West Sussex and another in the Docklands area of east London \u2013 during the tenure of ex-Tory PM Rishi Sunak.<\/p>\n

But let\u2019s begin with Nscale, which announced on Monday that it had signed ex-deputy PM Nick Clegg to its board (Clegg parted company with Meta, the company that owns Facebook, in 2024, having pocketed at least \u00a324 million from his six years there).<\/p>\n

Clegg\u2019s new job \u2013 where he\u2019ll be joined by his fellow ex-Meta executive Sheryl Sandberg \u2013 was announced to coincide with a fresh \u00a32 billion cash injection into the firm, valuing it at a hefty \u00a314.6 billion and making it, on paper at least, one of Europe\u2019s AI success stories.<\/p>\n

And yet an investigation by the Guardian newspaper has found that Nscale\u2019s flagship data centre project in Loughton, Essex, hasn\u2019t even begun construction. Last January, as part of its \u00a32.5 billion investment, it was announced Nscale would build \u2018the largest UK sovereign AI data centre\u2019 on the site. A press release \u2018confirmed\u2019 the purchase of the Loughton premises, claiming the site would be \u2018live\u2019 by the fourth quarter of 2026.<\/p>\n

Data centres are the backbone of AI, with their immensely powerful computers connecting to form a \u2018supercomputer\u2019 capable of processing vast amounts of data. Imagine an A-level student picking up their iPhone to ask ChatGPT \u2013 one of the world\u2019s most popular AI models \u2013 a question such as: \u2018Why did the First World War start?\u2019<\/p>\n

Enormous quantities of data need to be crunched not only to answer that question, but also to engage in what could be a lengthy follow-up discussion between the student and the AI. That crunching happens in data centres all over the world.<\/p>\n

Unless Britain builds its own hubs, we will never be a major player in AI. (We are already at a huge intrinsic disadvantage thanks to the Net Zero crusade, which has left us with some of the most expensive electricity in the developed world.)<\/p>\n

The Nscale facility was considered particularly significant because \u2013 as a \u2018sovereign\u2019 operation \u2013 it was intended to service British institutions, businesses and government operations rather than overseas clients.<\/p>\n

According to Nscale\u2019s own timetable, construction should therefore be well under way on the enormous climate-controlled warehouse in Loughton to house the servers destined to power Britain\u2019s AI ambitions. Instead, a year on, a local scaffolding firm is currently using the site for storage. Less tech-hub, more scrapyard.<\/p>\n

\"Plans <\/p>\n

Plans for the AI data centre in Loughton, Essex. It was set to be ‘the UK’s largest sovereign AI data centre’<\/p>\n

\"A <\/p>\n

A year on from the announcement, a local scaffolding firm is currently using the site for storage<\/p>\n

More intriguingly still, Land Registry records appear to suggest that Nscale is not in fact the registered owner of the premises, raising doubts over whether the promised data centre will ever be built at all.<\/p>\n

A year on from celebrating that alleged \u00a32.5 billion investment, the Government appears increasingly sheepish on the subject. In a statement to the Guardian, it weakly described Nscale\u2019s previous commitment as \u2018not a formal contract, rather an intention to commit capital\u2019 insisting that the figure was published by the company.<\/p>\n

For its part, Nscale denies scaling back its plans. A spokesman says: \u2018As a UK-headquartered company, we remain committed to the UK investment we announced.\u2019 They add that the Loughton project is \u2018progressing as we envisaged. We\u2019re investing not only in the site itself but also in offsite power infrastructure, local contractors and local suppliers.\u2019<\/p>\n

And then there\u2019s CoreWeave, founded in New Jersey in 2017 and which started life as \u2018Atlantic Crypto\u2019, an operation \u2018mining\u2019 the cryptocurrency bitcoin.<\/p>\n

In May 2024, then-PM Rishi Sunak described CoreWeave as \u2018the future of AI innovation\u2019, claiming the firm\u2019s new \u00a31 billion investment in British data centres would \u2018further cement the UK\u2019s position as an AI and tech superpower\u2019 (Sunak now works as an \u2018adviser\u2019 to AI firm Anthropic).<\/p>\n

Then-culture secretary Michelle Donelan said in perfectly clear terms the supercomputers at Gatwick and the Docklands would bring \u2018two new data centres to our shores\u2019 \u2013 and, at the end of 2024, CoreWeave duly announced the new data centres were operational.<\/p>\n

However, planning records suggest that precisely zero new datacentres have been built at either of those locations. It emerges instead that the facilities were not \u2018new\u2019 at all: they were in fact built in 2002 and 2015 respectively, had long been operational and had been leased by tech giants including Google and Fujitsu.<\/p>\n

Rather than building its own data centres, then, CoreWeave had instead merely rented existing space. To describe this sleight of hand as a communications fudge would be to put it lightly.<\/p>\n

According to Cecilia Rikap, professor of economics at University College London: \u2018The rules [on companies announcing investment] are very flexible and help [AI firms] to make these big claims and investments that a government such as Sir Keir\u2019s, which is desperate for good news, can use for their favour.\u2019<\/p>\n

For its part, CoreWeave says its method of using existing sites reflects the \u2018industry-standard\u2019 approach. In a platitude that could have been written by an AI model itself, the company added: \u2018We are delivering advanced, purpose-built AI infrastructure to support the development of AI at scale.\u2019<\/p>\n

Next month, the Government is set to deliver yet another bombastic AI announcement: a new \u00a3500million \u2018sovereign fund\u2019 for investing in the technology across the country.<\/p>\n

It isn\u2019t clear at this stage whether that money, if it ever appears, will go towards building data centres, developing software or funding some other technological purpose.<\/p>\n

In response to this article, a government spokesperson told the Mail: \u2019Our ambitions for data centres are paving the way for infrastructure that the UK can rely on for decades to come, and that will power breakthroughs from health to clean energy. We have already made strides towards that goal.<\/p>\n

\u2019This transformation won\u2019t happen overnight but the UK has the third largest AI market in the world\u00a0\u2013 a sector that doubled its economic contribution last year, growing 23 times faster than the rest of the economy.\u2019<\/p>\n

What we do know is that the Government continues to bang the AI drum at every possible opportunity.<\/p>\n

And yet, with private companies seemingly failing to hold up their side of the bargain, the ministers appear to be the only ones marching to its beat.<\/p>\n","protected":false},"excerpt":{"rendered":"Last January, in a rousing speech delivered at University College London, Sir Keir Starmer heralded the beginning of…\n","protected":false},"author":2,"featured_media":470933,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,97,1325,50,3721,86,56,54,55],"class_list":["post-470932","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-dailymail","tag-facebook","tag-news","tag-rishi-sunak","tag-technology","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/470932","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=470932"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/470932\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/470933"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=470932"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=470932"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=470932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}