The UK Budget on 28 October had a lot to say about AI. The government says it “has invested over £700 million” in it (Budget 2026). The Budget document, known as the Red Book, names one AI Growth Zone, in Lanarkshire. It pays for AI pilots in three Yorkshire authorities. The Budget says nothing about Wales’s two AI Growth Zones. The only Budget-day nod is a line in the new Data Centre Covenant, which promises to “continue to deliver the five AI Growth Zones across England, Scotland and Wales” (Data Centre Covenant).
Two zones, no Budget line
The Welsh zones have not been scrapped. A Lords written answer in May lists both as designated: “Anglesey (North Wales); a South Wales Cluster (spanning from Newport to Bridgend)” (UK Parliament). A draft planning statement for data centres, which the Budget says is out for consultation, names both: “North Wales through Prosperity Park on Anglesey and Trawsfynydd in Gwynedd; South Wales in a cluster of sites from Newport to Bridgend” (draft National Policy Statement). They are simply missing from the Budget’s main documents.
The promises were large. When it was announced in November 2025, the North Wales zone, at Prosperity Parc on Anglesey and at Trawsfynydd in Gwynedd, was said to bring 3,450 jobs (UK Government). The South Wales zone, announced the same month, runs along the M4 from Newport to Bridgend. It promised “at least 5,000 jobs” and “the potential to harness over 1GW by early 2030s” (UK Government).
They are simply missing from the Budget’s main documents.
The Budget has a “spotlight” on Scotland’s Central Belt. It says “The Lanarkshire AI Growth Zone is supporting more than 3,400 high-quality jobs and has attracted £8.2 billion in private investment” (Budget 2026). There is no matching line for either Welsh zone. The Budget speech’s Wales passage lists a science park, a bridge and a railway station (Budget speech). The UK Government’s own Wales release has no AI measure at all (UK Government).
The local AI money goes to England. The Budget offers “£30 million to pilot local partnerships” in West Yorkshire, South Yorkshire, and York and North Yorkshire. Later, the same document gives £15 million for “Local AI partnerships” from 2026-27 to 2029-30 (Budget 2026). The two figures do not match, and the Budget does not explain the difference.
Wales is not wholly absent. There is £20 million for AI hardware jobs, “building on existing strengths in semiconductor clusters including South Wales”. There is £2.5 million to expand the M-SParc science park on Anglesey, “subject to business case” (Budget 2026). Neither is money for the Growth Zones. The £20 million is a UK-wide line, and elsewhere the Budget says it includes an £18 million Chip Design Academy led by the University of Edinburgh.
Cheaper power, but not in Wales
The main financial help promised to AI zones is cheaper electricity. The UK Government’s zone plan, published in November 2025, sets no rate for Wales. It offers a 500MW data centre a discount of “up to: £24/MWh in Scotland; £16/MWh in Cumbria; £14/MWh in the North East” (Delivering AI Growth Zones).
Even there, it has not started. The plan says it will apply “from April 2027, subject to legislative timetables”. On 19 October, nine days before the Budget, a minister still called it “proposals for electricity bill support” (UK Parliament). The Budget does not mention the discount.
Two zones, two speeds
South Wales has momentum. In August, Vantage and Nebius announced “the first announced commercial capacity commitment in the South Wales AI Growth Zone”, at Newport. Vantage says it expects “more than 1GW of AI-ready capacity across Newport, Bridgend and Bro Tathan” (Vantage Data Centers).
North Wales is slower. Prosperity Parc has outline planning permission from Isle of Anglesey County Council, granted in 2025, and no detailed application yet (Anglesey planning register; Data Centre Watch). The 349MW figure often linked to the site is for a battery storage scheme, not the data centre, according to consultants and trade press who reported the application. We have not found any public announcement of an investment partner. The November 2025 announcement expected a deal “in the coming months”.
South Wales has momentum.
The grid is tight. The National Energy System Operator says capacity across the North Wales boundary “is limited to 2.0GW due to a thermal constraint” on the Pentir to Trawsfynydd 400kV line (NESO). National Grid says “it is essential that the strengthened connection is in place by 2030” (National Grid).
Why the silence matters
Growth Zones need land, roads, grid links and skills. Much of that depends on public capital. The Welsh Government says its “capital funding will be almost 10% lower in real terms by 2029-30”. It adds: “This significantly limits our ability to invest in economic growth measures and the public infrastructure that communities and businesses rely on” (Welsh Government).
The most useful UK decision may cost nothing.
The UK Government says the Welsh Government will have “an additional £450 million for public services” because of the Budget (UK Government). The Budget says this comes “through the application of the Barnett formula” (Budget 2026). It is general funding, not money for AI. The Welsh Government puts it at £448 million (Welsh Government).
We think that means the zones will lean harder on UK decisions.
The most useful UK decision may cost nothing. The new Data Centre Covenant says “a new Ministerial Control Centre will accelerate time to power for strategic data centres” (Budget 2026). Those are the tools a constrained grid needs.
But “strategic” is not yet defined. The government will set out the definition “in due course” (Budget 2026). Nothing in the Budget says the Welsh zones will qualify.
What helps
A faster grid queue. “Strategic” sites that pass the Covenant’s five tests get help with grid connections. The Startup Coalition calls it “a big win, addressing the Achilles heel of the UK’s AI ambitions” (Startup Coalition).
More for British AI firms. The Sovereign AI Fund gets “an additional £60 million” from 2027-28. That sits on top of the £500 million it already had. It gains a new focus on “physical AI”, “in areas such as robotics, autonomous systems and advanced manufacturing” (Budget 2026). Its R&D procurement scheme gets £80 million in the Budget, or £60 million in the government’s 24 October release (UK Government). The two figures do not match. The Budget’s own summary adds up to the £80 million figure.
AI in public services. There is £35 million for GovAI, to give civil servants “access to the latest frontier AI tools”. There is £100 million for robot-assisted surgery in England, which is about using robots, not building them (Budget 2026).
Founders and investment. A new 10% Founders’ Relief covers up to £10 million of lifetime gains from April 2027. The main-rate first-year allowance for new plant and machinery rises to 50% from January 2027 (Budget 2026).
What does not help
Security comes first. The Budget says the government “will invest around £500 million to build the secure foundations for an AI-enabled economy”. That includes £120 million more for the AI Security Institute, £165 million for AI biosecurity, £154 million for cyber defences and £40 million for a National Agentic Security Unit. That unit will “detect, investigate and respond to cases of rogue agentic systems” (Budget 2026).
Nothing on the power bill. Data centres get a faster queue, not cheaper electricity. The new British Industrial Competitiveness Scheme covers electricity-intensive manufacturers, and data centres are not named (Budget 2026). The Covenant’s first test, headed “Lower electricity bills”, asks strategic data centres to cover “any energy costs they create” (Data Centre Covenant). techUK says: “Energy is one of the main weaknesses of this Budget” (techUK).
A higher tax on investment. The main writing-down allowance falls from 14% to 12% from April 2027. The Budget says this is “to raise revenue”. At the same time, the main first-year allowance rises from 40% to 50%. Taken together, the two changes raise £1,120 million in 2031-32 and about £5.2 billion over six years (Budget 2026). The Budget’s costings table puts about £490 million on the whole AI package over the same six years (Budget 2026, Table 6.1, line 31). It also lists £160 million of financial transactions for Sovereign AI (Table 6.2, line 4).
Data centres get a faster queue, not cheaper electricity.
More regulation ahead. The government “will consult next year on how to tackle insecure technology at source and consider where liability for cyber breaches should sit” (Budget 2026). We will look at that separately.
Our view: guardrails before engines
This section is opinion.
AI’s risks are real. But the balance of this Budget points the wrong way.
Around £500 million goes on making AI safe. We can find no Budget line set aside to build British frontier models. The Sovereign AI Fund top-up could back such firms, but it is not earmarked for them. The AI Security Institute’s extra funding is for “frontier AI evaluation and testing” (Budget 2026). In plain terms, Britain will test powerful models that others build.
That matters because compute is now infrastructure. Oxford researchers say the UK hosts about 4% of the world’s AI compute but controls about 0.1% (University of Oxford). A faster grid queue helps. It does not lower the price of the power that compute runs on.
In plain terms, Britain will test powerful models that others build.
Robotics gets a “focus area” inside a £60 million top-up, plus £20 million for AI hardware. Full expensing stays for companies buying new plant. But we think the cut in the main writing-down allowance makes some investment outside full expensing a little more costly, because relief on second-hand assets and older balances now comes more slowly.
The Office for Budget Responsibility expects AI to lift productivity growth by 0.2 percentage points a year by the medium term. It also notes that only 30% of businesses used any AI in September 2026, up from 15% two years earlier (OBR). Growth will come from firms that build and use AI. It will not come from guardrails alone.
We think four policies would help Wales. These are our own proposals.
- Name both Welsh AI Growth Zones when “strategic data centres” are defined, so they reach the front of the grid queue.
- Extend the AI zone power discount to Wales, and tackle the price of power for compute, not just the wait for it.
- Fund British frontier model capability, alongside the money for testing other people’s models.
- Back robotics and automation manufacturing with capital, not only a focus area.
Wales has the sites, the chip cluster and the zones. The Budget had room to say so. It did not.