OpenAI adds UK data hosting: what it means for government and business
OpenAI will offer UK-based data hosting for its business customers, announced on 23 October 2025. The move, secured through its partnership with the Ministry of Justice (MOJ), gives organisations the option to keep data on sovereign servers in the UK - improving assurance on privacy, accountability, and resilience.
For government teams, this lowers barriers to responsible AI adoption. It supports the Government's Plan for Change and provides a clearer path to scale AI use cases with stronger data controls.
Why this matters
Data residency is now a practical option for agencies and suppliers that need UK data storage to meet policy, compliance, or contractual requirements. This can accelerate pilots and production deployments while maintaining public trust.
The OECD estimates AI could add 0.4 to 1.3 percentage points to UK productivity growth - up to £140 billion a year by 2030. For context on AI's economic potential, see the OECD's work on AI policy and impact here.
Key parts of the announcement
- UK data hosting: OpenAI will enable business customers to store data within the UK for the first time, supporting privacy, accountability, and cyber resilience.
- MOJ partnership: The agreement builds on ongoing collaboration to apply AI in justice services and improve frontline capacity.
- Policy momentum: The UK is launching an AI Growth Lab to test how rules affect responsible AI adoption, and establishing AI Growth Zones to attract private investment across regions.
- Event: The Deputy Prime Minister outlined the plan at OpenAI's Frontiers Conference. Learn more about the event on OpenAI's site here.
Justice services: time back to the frontline
Over one thousand probation officers will begin using Justice Transcribe - an MOJ-built AI tool that records and transcribes conversations with offenders. The goal is to reduce manual note-taking and admin so officers can spend more time face to face with people they supervise.
Across the MOJ, AI is expected to save up to 240,000 staff days a year. Similar tools in the NHS are helping speed up patient discharge, freeing beds and helping cut waiting lists.
Infrastructure: Stargate UK
OpenAI, NVIDIA, and UK firm NScale plan to establish Stargate UK, a platform intended to deploy OpenAI's technology on sovereign infrastructure. Phase one targets up to 8,000 NVIDIA GPUs early next year, with potential to scale to 31,000, across several UK sites including Cobalt Park in the North East Growth Zone.
This complements the data-hosting offer by building local compute capacity, which is essential for secure, high-performance AI services.
Skills and sector momentum
The Government and industry are working to upskill 7.5 million people in AI by 2030 - around a fifth of the workforce. Sector champions in life sciences and financial services will help accelerate safe, high-value use cases across the economy.
Usage of OpenAI products in the UK has reportedly quadrupled over the past year, with civil servants and established firms using AI to save time and increase productivity.
What government teams can do next
- Confirm data residency needs: Work with your SIRO/DPO and security teams to identify where UK-only data storage is required or preferred.
- Select high-yield pilots: Start with transcription, document summarisation, research assistance, and drafting - areas with clear time savings and low operational risk.
- Strengthen assurance: Run DPIAs, update security patterns, and set clear retention/monitoring policies for AI use.
- Measure outcomes: Track time saved, error rates, user satisfaction, and service-level improvements (e.g., faster case handling, quicker discharges).
- Invest in skills: Build AI literacy and prompt fluency across roles. Practical training by job function is available here and recognised AI certifications are listed here.
Voices from the announcement
"New AI tools are already allowing our brilliant probation officers to spend far less time filling out paperwork and far more time face to face with offenders, making them less likely to reoffend," said the Deputy Prime Minister.
OpenAI CEO Sam Altman noted that UK usage of OpenAI products has increased fourfold in the past year, adding that both civil servants and established firms are using AI to save time and get more done.
The Technology Secretary underlined the focus on infrastructure and public service delivery - giving key workers more time for meaningful work by cutting administrative overhead.
Context and policy direction
This data-hosting offer supports the Government's Plan for Change and the MOJ's AI Action Plan to use AI safely, ethically, and transparently. The Deputy Prime Minister has previously highlighted responsible, secure AI adoption on the global stage, including at the UN Security Council.
Taken together - data residency, modern infrastructure, and skills - the UK is creating conditions to scale AI responsibly in public services and across the wider economy.
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