UK AI Growth Zone Program for Data Centers in Limbo After DSIT Closure

The UK government has yet to decide which department will oversee its flagship AI Growth Zone (AIGZ) program, leaving the initiative for data center development in a state of uncertainty. Launched in January 2025 under former Prime Minister Keir Starmer, the program was designed to encourage data center construction and attract billions of pounds in investment through financial incentives and priority access to power. It had been managed by the Department for Science, Innovation, and Technology (DSIT), which was abolished last Monday after new Prime Minister Andy Burnham took office.

While many of DSIT’s functions have been reassigned to the Department for Business and Trade, now renamed the Department for Business, Innovation, Science and Trade, and the Department for Culture, Media, and Sport, ministers have yet to determine which team will run the AIGZs. Officials told DCD that the government remains committed to delivering the growth zones, and confirmation of the responsible department will follow “in due course.” However, the government declined to answer questions about potential changes to the program as a result of the Whitehall reorganization or whether the original delivery team would remain in place.

So far, five growth zones have been established: two in Wales, one in Oxfordshire, one based around Cobalt Park near Newcastle, and one in North Lanarkshire, Scotland. The program is part of a broader target to add 6GW of new AI-ready data center capacity in the UK by 2030. At launch, Starmer said the zones would help “unleash the potential” of AI in the UK, but it remains unclear whether successor Burnham shares this enthusiasm for the scheme.

Industry figures have questioned the effectiveness of AIGZs, noting that they do little to address underlying issues such as power availability. Energy costs in the UK are higher than in the US and other European countries, and obtaining a new grid connection takes an average of eight years. The uncertainty around the program comes as the Data Centres All-Party Parliamentary Group (APPG) launched an inquiry titled “Unlocking the UK’s Data Centre Growth Opportunity.” The inquiry will assess whether the current policy and regulatory environment is sufficient to support place-based growth in the sector and what changes may be needed to strengthen the UK’s international competitiveness in digital infrastructure. It is seeking contributions on energy infrastructure, investment, planning, and innovation.

Chris Curtis MP, chair of the Data Centres APPG, said: “Data centers are fast becoming some of the most significant infrastructure investments in the country, and with the right approach, they can deliver good growth, good jobs, good skills and lasting economic and social benefit in the communities that host them. This inquiry is about making sure that as the sector expands, it does so in a way that spreads opportunity across every region of the UK, not just where investment already concentrates.” Written submissions to the inquiry are due by Friday, September 25.