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OpenAI halts North Tyneside data centre project
OpenAI has suspended its Stargate UK initiative, which included a planned data centre at Cobalt Park in North Tyneside, citing high energy costs and regulatory concerns. The £31bn technology agreement aimed to strengthen the UK's AI infrastructure.
Local leaders express disappointment
North East Combined Authority (Neca) called the decision "disappointing" but acknowledged it reflected broader national challenges around energy pricing and regulatory certainty. A spokesperson emphasized the region's commitment to attracting investment despite the setback.
"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."
North East Combined Authority spokesperson
Neca confirmed the North East remains an AI Growth Zone, with strong assets in power, land, and skills, and said it would continue working with the government to address barriers.
Political reactions and concerns
Labour MP Chi Onwurah, chair of the Science and Technology Committee, described the pause as a "blow" during an interview on BBC Radio 4's Today programme. She criticized the initial announcement in September 2025-timed with former U.S. President Donald Trump's state visit-as "very long on ambition and short on detail."
Onwurah supported the government's push to use AI as a driver of economic growth but warned against over-reliance on U.S. investment. She noted the Labour government had already taken steps to reduce energy costs for energy-intensive industries like AI but stressed further action was needed.
She also pointed to global energy price spikes linked to the Iran conflict and questioned aspects of OpenAI's business model.
Government highlights AI investment
A government spokesperson responded to the announcement by highlighting the UK's AI sector, which has attracted over £100bn in private investment since Labour took office. The spokesperson said this investment was delivering jobs and opportunities for workers.
Project background
Announced in September 2025, the Stargate UK scheme was intended to bolster the UK's "sovereign compute capabilities" and support domestic AI development. The Cobalt Park site in North Tyneside was a key component of the broader £31bn agreement.
OpenAI stated it would only proceed with the project when "the right conditions" could ensure long-term infrastructure investment.
