Headline:
UK’s multibillion-pound AI push relies on ‘phantom investments,’ Guardian finds
Key Facts
- A Guardian investigation reveals that major AI datacentre and supercomputer announcements by the UK government since 2024 involve rented facilities, unbuilt sites and unverified funding.
- Key companies include Nvidia-linked Nscale and CoreWeave, whose claimed new UK datacentres in London Docklands and Crawley appear to be pre-existing rented sites rather than newly constructed.
- An Essex “supercomputer” site promoted as due for completion by end of 2025 remains an Alandale scaffolding yard.
- Nscale announced a $2bn funding round and $14.6bn valuation on Monday alongside the appointment of former UK deputy prime minister Sir Nick Clegg and ex-Meta COO Sheryl Sandberg to its board.
- The Department for Science, Innovation and Technology acknowledged no contract exists for one £1.9bn ($2.5bn) announced investment and said it is “not playing an active role in auditing these commitments.”
Lead paragraph
The UK government’s ambitious plan to “mainline AI into the veins” of the British economy is built on shaky accounting and “phantom investments,” according to an exclusive Guardian investigation published Monday. Successive Conservative and Labour administrations have promoted multibillion-pound deals with Nvidia-linked firms Nscale and CoreWeave to build new datacentres, create thousands of jobs and construct a national supercomputer, yet many of the promised facilities do not exist as described and some announced contracts were never signed. The findings raise fresh questions about the credibility of the government’s AI growth strategy and similar high-profile investment announcements made globally in the past year.
Body
The investigation centres on two companies backed by Nvidia, the $4tn US chipmaker that has become central to the global AI boom. London-based Nscale and US-based CoreWeave have featured prominently in UK government press releases since 2024 as evidence that Britain is successfully attracting private capital to turbocharge its economy through artificial intelligence.
In 2024, then-Prime Minister Rishi Sunak’s Conservative government hailed a £1bn commitment from CoreWeave as a landmark deal that would “cement the UK’s position as a world leader in AI.” CoreWeave’s press release stated the investment would deliver two new datacentres and create job opportunities. Six months later the company announced the facilities were operational — one in London Docklands and one in Crawley, near Gatwick Airport.
However, planning records show neither CoreWeave nor the partners named in its announcements constructed new datacentres at those locations. The sites appear to be rented existing infrastructure rather than purpose-built facilities, the Guardian reported. Government communications implied physical new buildings were being delivered, the newspaper said.
A similar pattern emerged with Nscale. The company has been closely associated with plans for a major “supercomputer” facility in Essex, 12 miles north of London. Official artist impressions and government statements portrayed a cutting-edge AI supercomputing site due to be completed by the end of 2025. In reality, the location remains an Alandale scaffolding yard filled with scrap metal, according to photographs and on-site verification by the Guardian.
On Monday, Nscale announced it had raised a $2bn funding round, lifting its valuation to $14.6bn, and revealed that Sir Nick Clegg and Sheryl Sandberg had joined its board. The timing of the announcement, coming amid the Guardian’s reporting, has drawn additional scrutiny.
The Department for Science, Innovation and Technology (DSIT) declined to answer detailed questions about the specific investments but rejected the newspaper’s overall assertions. In a statement, the department said the UK’s AI sector has attracted more than £100bn in private investment since the current government took office and grew 23 times faster than the wider economy last year.
However, DSIT conceded limitations in its oversight. The department acknowledged there is no contract in place for a £1.9bn ($2.5bn) investment that had been publicly declared as signed. It also stated it was “not playing an active role in auditing these commitments.”
‘Phantom investments’
Cecilia Rikap, professor of economics at University College London, told the Guardian that such announcements represent “phantom investments.” She said big tech companies often inflate projected job creation and economic impact to please governments eager to demonstrate growth.
“These are phantom investments,” Rikap said. “Big tech companies artificially inflate datacentres’ job creation and economic impact to please governments like the British one, which are desperate to claim they are making the economy grow.”
The UK’s experience mirrors a global trend. More than £500bn ($630bn) in AI-related investments were announced worldwide in 2025, many through high-level press releases from governments and technology companies. Prime Minister Keir Starmer has repeatedly emphasised AI’s potential, stating last year that full embrace of the technology could add £47bn annually to the UK economy.
The Guardian investigation suggests that without robust independent verification, much of the promised value may flow to US-headquartered companies and their investors rather than delivering tangible new infrastructure or jobs in Britain.
Impact section
The revelations are likely to embarrass the Labour government, which has made AI a central pillar of its economic strategy since taking power. Starmer unveiled the government’s “AI opportunity action plan” at University College London in January 2025, positioning the UK as a leader in the technology.
For developers and AI startups, the findings raise concerns about the reliability of claimed national computing capacity. Many UK-based AI companies have been counting on access to the promised supercomputing resources and datacentre expansion to compete internationally. If those resources are less substantial than advertised, Britain’s ability to retain home-grown AI talent and attract new investment could be undermined.
The story also highlights broader tensions in the global AI race. While governments compete to announce ever-larger investment figures, the actual delivery of physical infrastructure — power, cooling, land and specialised hardware — remains constrained. Nvidia’s dominant position in the supply chain gives its partner companies significant leverage in negotiations with national governments.
What’s next
The Guardian report is expected to prompt calls for greater transparency and independent auditing of AI investment announcements. Parliament’s science and technology committee may seek evidence from Nscale, CoreWeave and DSIT officials in the coming weeks.
Nscale has not yet responded publicly to the specific allegations about the Essex site. The company’s newly appointed board members, Clegg and Sandberg, have not commented on the Guardian’s findings.
The UK government continues to pursue additional AI infrastructure deals. Whether future announcements will include stronger verification mechanisms or contractual commitments remains to be seen. Industry analysts suggest that as power and chip shortages persist, governments may face increasing pressure to distinguish between genuine new capacity and rebranded or rented facilities.
The episode serves as a cautionary tale for other nations racing to secure a share of the AI economy. As Professor Rikap noted, the “rules are very flexible” when it comes to announcing headline investment figures.
Sources
- Revealed: UK’s multibillion AI drive is built on ‘phantom investments’ | The Guardian
- From press release … to scrap metal site: the Essex ‘supercomputer’ that’s still a scaffolding yard | The Guardian
- British AI datacentre firm Nscale raises $2bn as Sheryl Sandberg and Nick Clegg join board | The Guardian
- Missing money, shipped chips and a 350,000% profit: key takeaways on AI ‘phantom investments’ | The Guardian