UK budget adds AI security funding and ties data-centre power support to local benefits

Britain’s October 28, 2026 Autumn Budget pairs new AI-security spending with a bargain for data-centre developers: deliver local benefits in exchange for help securing electricity. Chancellor John Healey also announced founder tax relief, placing public funding, infrastructure support and incentives for entrepreneurs within the same budget package.

Electricity support comes with community tests

The government will establish a Data Centre Covenant covering strategic data centres. The Treasury’s Budget document says projects will face tests concerning their contribution to communities and the UK’s economic interests. Government support for energy connections will target projects that contribute most to the country’s objectives.

Healey set out three local requirements: data centres must invest in their host communities, create local jobs and protect local water supplies. The proposed conditions cover both economic benefits for nearby residents and protection of a local resource.

In return, Healey said critical data centres would receive the grid connections they need. Where necessary, they would also be allowed to build onsite electricity generation while waiting for those connections. That permission is part of the government’s promised support, not confirmation that power facilities have been built.

Nowhere is the necessary role for the state clearer than in artificial intelligence

John Healey, delivering the Autumn Budget

Two named allocations for AI security

Alongside the infrastructure offer, Healey announced hundreds of millions of pounds for AI security and sovereignty. The Treasury document specifies two allocations, backing an existing institute and a new biosecurity initiative:

• An additional £120 million for the AI Security Institute.
• £165 million for a new National AI Biosecurity Initiative.

Founder relief uses a different lever

For founders, Healey announced tax breaks including a reduced capital-gains tax rate on gains of up to £10 million. That figure is the amount of gains covered by the reduced rate, rather than a cash payment. He also said regional hubs would receive funding to support innovation.