As the UK government pushes forward with its AI Growth Zones, now opening up bids from local and regional authorities, leaders across the North are questioning whether this will be a transformative moment for regional tech ecosystems – or another promise that fails to deliver.
The only growth zone revealed so far is in a sleepy Oxfordshire village in Culham, announced in Keir Starmer’s new AI Opportunities Action Plan recently. But there was no mention of the North.
Yet the government claims interest is already building for ‘promising’ sites in Scotland, Wales, the North East, and North West, with a particular focus on ‘deindustrialised areas’ of the country to become the next AI Growth Zones.
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While there are general glimmers of optimism about the government’s grand AI plans and what it could mean for the North, concerns remain about whether it will truly bridge the North-South gap.
Digital infrastructure providers like Pulsant, which operates data centres across the UK including in Newcastle and Manchester, will be a key part of the conversation.
Robin Ferris, enterprise architect and Pulsant AI lead, points to the need for a well-distributed digital infrastructure: “A diverse and well-distributed digital infrastructure across the UK, including the North, is essential to making AI accessible to all. By ensuring businesses have the right resources and connectivity, we can create an environment where innovation flourishes everywhere, turning ideas into real-world impact faster,” Ferris explains.
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Establishing AI Growth Zones in key Northern cities, where there is a combination of industrial heritage and a strong renewable energy presence, could create a competitive advantage.
“Energy demand is normally lower in the North compared to the South, meaning organisations wanting to expand their AI capability can do so with a more reliable and environmentally friendly power supply,” he adds.
Greater Manchester has “enormous potential” to become an AI Growth Zone
Investment in AI infrastructure is already underway across the North. Look to Stockport and Kao Data is building a £350m data centre, helping to position Greater Manchester as an AI hub.
“Kao Data has long recognised the potential of Greater Manchester to become the UK’s next AI and advanced technology hub, and with its position as the UK’s largest economy outside of London, the city region was the perfect place to build-out our next £350m data centre,” says Spencer Lamb, CCO at Kao Data.
He believes Greater Manchester has “enormous potential” to become an AI Growth Zone, thanks to being home to the “largest AI ecosystem in the UK by headcount” and a “robust” tech talent pipeline from local universities and research institutions.
“With a vision provided by the Mayor Andy Burnham and the Greater Manchester Combined Authority’s (GMCA) Digital Blueprint strategy, there is no better location for a new AI Growth Zone. Not only do we strongly support any proposal from GMCA, but we at Kao Data are delighted to be part of that journey.”
For Katie Gallagher OBE, managing director of Manchester Digital and chair of the UK Tech Cluster Group, she agrees Greater Manchester is “well placed” to be the next AI Growth Zone.
“The region already has a strong tech ecosystem and the right foundations to drive AI innovation. Our universities produce top STEM talent and retain graduates, ensuring a steady pipeline of skilled professionals. We also have a network of businesses already working with AI technologies and targeted investment will help them scale faster,” she explains.
“With the right backing, Greater Manchester can cement its position as a global AI hub, creating high-quality jobs and driving economic growth. Manchester Digital looks forward to supporting this work and ensuring it benefits the whole region.”
It’s not all about Manchester though. Laura Richards, AI and public policy expert, says an AI Growth Zone in the North East could be “transformational” – but only if the region secures its place in the government’s plans.
“The existing £10bn investment to build a data centre on the former Britishvolt site in Northumberland is a major asset, but there’s a risk that decision-makers see it as a reason to focus AI investment elsewhere. That would be a missed opportunity.”
Leeds, Manchester and Newcastle all stand out as “prime candidates” for AI Growth Zones, says Rhys Merrett, head of tech PR at The PHA Group. But he warns: “for far too long, there has been a focus on London, not the UK, as a global hub for tech innovation”.
Going further, he says the lure of regional AI Growth Zones in the North shouldn’t be yet another empty government promise: “AI Growth Zones have an important role to play here, ensuring the benefits of AI are felt across the country. Labour has the chance to make this a reality through such initiatives. However, it needs to ensure this is not another empty pledge, bold on vision but short on delivery.”
He adds: “The North has been given plenty of assurances from successive governments about their prioritisation of regional regeneration led by business support. The government now has a chance to see this through, focused on a technology that will radically transform society.”
“AI zones will not suddenly address the regional gap between the North and South”
Despite the optimism, there are still plenty of challenges to address before more AI Growth Zones are introduced.
“We need to recognise that these AI zones will not suddenly address the regional gap between the North and South. Appropriate infrastructure needs to be in place,” urges Merrett. Robust infrastructure, particularly energy security, are crucial.
“We know data and AI hubs are huge users of energy. Data centres operate 24/7 and cannot tolerate power disruptions. Regions need resilient grids capable of meeting these high demand levels, so there is a question as to whether certain regions can take on the extra energy demand requires from AI hubs to be fully operational.”
One solution could lie in renewable energy, particularly thanks to offshore wind farms in the Humber and Dogger Bank Wind Farm, explains Ferris, which could supply AI Growth Zones with sustainable power.
“The AI growth zones will thrive particularly in regions where digital infrastructure is not only affordable, but also sustainable,” he says.
The North East already has an “established low-carbon supply chain”, argues Laura Richards. “With the ORE Catapult leading in offshore renewables, there’s a clear opportunity to build AI infrastructure that is genuinely sustainable.”
With more of a positive take, James Griffiths, creative director at Be Creative Media, believes AI Growth Zones could breathe new life into deindustrialised areas. “Revitalising our industrial heritage and transforming deindustrialised areas into hubs for innovation is a powerful way to attract cutting-edge startups and forward-thinking businesses,” he explains.
With projects like MIX Manchester, a science and innovation hub near Manchester Airport, Griffiths believes this is further evidence in Manchester’s potential in becoming an AI Growth Zone – and would unlock those “thousands” of new jobs regionally.
“These zones will attract start-ups and major tech companies, generating direct roles in data science, software engineering, and AI research. The ripple effect will boost employment across related industries such as infrastructure, marketing, logistics, and education, while local businesses like cafés, housing, and transport will also benefit.”
Jonny Clark, CEO of economy expert Capital Enterprise, is also optimistic. He says: “The AI growth zones offer a great opportunity at the intersection of where technology meets economic development. I’m personally quite excited by the announcements, as it will offer many of the regions of the UK which have assets that contribute to our longstanding excellence in artificial intelligence the opportunity to better convert that to local sustainable employment and economic prosperity.”
The government says AI Growth Zones have the potential to create “thousands” of regional jobs and the wider AI Opportunities Plan will decentralise AI development. But for it to succeed, it must go beyond political rhetoric. Investments in digital infrastructure, sustainable energy, and regional talent pipelines will be essential to ensuring the North has a real opportunity to lead in AI.
