AI Growth Zones
A Boost for Innovation or a Missed Opportunity?
One of the headline proposals in the UK’s AI Opportunities Action Plan is the creation of AI Growth Zones (AIGZs)—areas where planning rules will be relaxed to fast-track the development of AI data centres and associated infrastructure. The government hopes this will attract investment, support regional development, and reinforce the UK’s AI capabilities.
But will this policy truly accelerate AI adoption and economic growth, or are there environmental and implementation challenges that could limit its effectiveness?
The assumption is that AI will generate employment and increase growth, but the government has not conducted an economic assessment of their plans, and how focus on the needs of AI zones may adversely impact other sectors. Without an assessment, both risks and benefits are speculative. We include an example of how meeting the needs of AI zones may reduce economic activity in the Heritage Sector.
England’s Heritage Sector is estimated to have contributed £44.9 billion in Gross Value Added (GVA) to the UK economy in 2022 and supported the employment of over 523,000 workers (CEBR, 2024). This contribution is roughly comparable with that of the UK’s software industry.
Free access to museums in the UK is a significant incentive for foreign visitors. It allows them to explore world-class collections without worrying about additional costs, making the UK an attractive destination for cultural tourism.
With over 200 free museums across England, including iconic institutions like the British Museum and the National Gallery, visitors can experience a rich cultural heritage without financial barriers.
AI policies that reduce the revenues of these galleries and museum, such as the removal of copyright from photographs, may force heritage sites to introduce entrance charges, impacting tourist numbers.
Will AI Growth Zones attract real investment?
✅For:
Shopify CEO Tobi Lütke says he’s now prioritising AI hires over traditional roles, signalling a growing industry-wide shift in investment focus. “AI is going to be a bigger part of the world. Everyone needs to learn how to leverage it.”
Mark Zuckerberg (Forbes, Jan 2025) claims AI will soon replace mid-level software engineers. That suggests increasing demand for top AI talent and innovation, potentially concentrated in AIGZs if incentives are attractive. Mid-level vacancies have been a consistent constraint on growth for the UK software industry.
Substantial Private Investment in UK AI Sector: Since July 2024, the UK AI sector has attracted an average of £200 million per day in private investment, totalling approximately £1.75 billion by early 2025.
Rapid Growth of AI Companies: The number of AI companies in the UK has increased by over 600% in the last decade, reflecting a significant expansion in the sector.
⚠️Against:
Existing AI hubs like London, Cambridge, and Manchester already have ecosystem advantages, talent, infrastructure, and investor networks, that AIGZs may struggle to replicate quickly.
Energy costs and talent availability (not planning rules) are often more significant to AI companies. The cost of post-graduate education in STEM subjects is high. Statisticians are in demand by the Financial Sector who offer higher salaries than equivalents in AI.
Zuckerberg’s comments also raise the risk of job displacement, not just creation, suggesting investment might not translate into net-positive employment.
AIGZs may favour large corporations who can capitalise quickly on incentives, rather than SMEs or start-ups which lack the same capital or scale.
2. The environmental impact of AI Growth Zones
✅Positive Opportunities:
AIGZs could be a chance to lead in sustainable AI infrastructure, e.g., encourage the development of numerically efficient algorithms that make use of traditional analytic approaches in tandem with AI.
Investments in Sustainable Data Centres: Companies like Amazon Web Services have committed to significant investments in data infrastructure, with an emphasis on sustainability, such as their £8 billion investment in UK data centres.
⚠️Key Concerns:
AI models are energy-intensive: training ChatGTP4 consumed the equivalent amount of energy as flying a 747 jet around the world six times.
Data centres are already under scrutiny for high water and electricity use. Relaxing planning could worsen this without strong safeguards. AI workloads are projected to account for around 20% of data centres’ electricity demand by 2030, up from 10% currently.
Potential Conflict with Net-Zero Goals: The increasing energy demands from AI and data centres could outpace the growth of renewable energy capacity, posing challenges to the UK's net-zero emissions targets.
3. Regional impact: Will AI Growth Zones create jobs or deepen the digital divide?
✅For:
Targeted investment could redistribute tech jobs beyond London and the South East, long-standing goals of the Northern Powerhouse and similar efforts.
LSE insights show high demand for AI and cloud skills in 2025, and these can be developed via remote or regional training programmes.
AIGZs can be a lever for local reskilling and SME innovation if well supported.
⚠️Against:
Without strong local engagement and incentives, AIGZs may be dominated by foreign tech giants, limiting the benefit to UK-based businesses and local workers.
Lessons from Silicon Roundabout show that clustering doesn’t automatically deliver inclusive growth, high rents and lack of housing followed.
A “build it and they will come” approach has risks, if infrastructure is prioritised over skills and support, regional divides may widen.
4. Are relaxed planning rules the right approach?
✅ For:
Faster development of critical AI infrastructure (e.g., data centres, testing facilities) could help the UK keep pace with international competitors.
Planning can be a delaying factor in data centre builds, relaxing greenbelt restrictions for example can speed up the development of data centres.
⚠️Against:
Talent and capability are more pressing than planning rules, hiring and skill shortages are the real choke points and they arise from a lack of post-graduate education planning for STEM subjects.
Government must balance speed with long-term viability, ensuring zoning includes environmental impact assessments, water usage controls, and access equity.
Environmental Risks of Rapid Expansion: Fast-tracking AI data centres without adequate environmental considerations could exacerbate energy consumption issues, as data centres are anticipated to represent 6% of total electricity consumption in the UK by 2026.
What’s next?
In our next post, we’ll explore one of the UK’s most ambitious data initiatives: The National Data Library. Is it the key to unlocking AI’s full potential, or a privacy minefield waiting to happen?
Stay tuned for The National Data Library – Unlocking AI Potential or a Privacy Minefield?
