# UK Budget Puts About £700 Million Into AI, Most of It for Security, and Offers Data Centres Faster Grid Access in Return for Local Commitments Times of AI Desk · 2026-10-28 · Policy [https://timesof.ai/2026/10/uk-budget-2026-700m-ai-package-data-centre-covenant](https://timesof.ai/2026/10/uk-budget-2026-700m-ai-package-data-centre-covenant) > Britain's Budget on October 28 sets out what HM Treasury calls a £700 million AI package. The Budget document earmarks around £500 million for AI security and resilience, including an additional £120 million for the AI Security Institute, a £40 million unit for rogue AI agent incidents and £165 million for a National AI Biosecurity Initiative. A new Data Centre Covenant offers faster grid connections to strategic data centres that meet tests on energy bills, local investment, jobs and security; which projects count as strategic is still to be defined. Most of the money in Britain's new AI package is for defence against AI rather than for spreading it. The Budget document says around £500 million of it goes to "secure foundations" such as testing, cyber defence and biosecurity, while the part most likely to shape where the industry builds costs little up front: a Data Centre Covenant that trades faster grid connections for promises on bills, jobs and local investment. ## The headline number HM Treasury's Budget press release calls the measures "the government's most ambitious AI package yet, investing £700 million." The Budget document itself says that "at this Budget, the government has invested over £700 million" in AI. Neither document adds up the individual lines to that total, and we have not tried to. ## Security and resilience - **AI Security Institute.** An additional £120 million over 2026-27 to 2029-30 "to strengthen the UK's frontier AI evaluation and testing capability," according to the Budget document. - **Rogue agents.** £40 million for a new National Agentic Security Unit, which the document says will "detect, investigate and respond to cases of rogue agentic systems." The press release describes it as "a world-first national capability to investigate and respond to agentic security incidents." - **Cyber defence.** The document puts £154 million into cyber defences, including a £70 million National Exposure and Real-Time Vulnerability (NERV) Centre at the National Cyber Security Centre, an additional £24 million for the public-sector AI defence programme, and £60 million for the first phase of a national Cyber Shield that includes a £25 million AI and Cyber Security Challenge Fund. - **Biosecurity.** £165 million goes to a new National AI Biosecurity Initiative, including £100 million between 2027-28 and 2029-30 for the AI Biosecurity Lab announced on October 24, which the document says will be supported by up to £200 million in AI model credits from OpenAI and Anthropic. We [reported the lab's launch](https://timesof.ai/2026/10/uk-ai-biosecurity-lab-100m-openai-anthropic-200m-credits) and have updated that article with the Budget detail. ## Adoption and sovereign capability - The Sovereign AI Unit gets an additional £140 million, according to both documents. The Budget document separately lists an additional £60 million for the Sovereign AI Fund from 2027-28 and £80 million more for its challenge-led R&D procurement scheme. - A £60 million AI Pathfinder Fund will test fixes for cross-government barriers raised by the AI transition, and a Chancellor's AI Challenge Prize backed by £15 million will start with the NHS, with a top award of up to £2.5 million. - The press release says £30 million will pilot local AI partnerships with West Yorkshire Combined Authority, South Yorkshire Mayoral Combined Authority and York and North Yorkshire Combined Authority. - A further £20 million will support jobs in AI hardware, including a UK advanced Chip Design Academy led by the University of Edinburgh, the document says. ## The Data Centre Covenant The Budget document says all data centres are encouraged to meet the covenant's tests and that those seeking enhanced government support will be required to. The tests cover paying their "fair share" of energy costs so households do not pick up the bill, agreeing a Local Benefit Plan with the host community, environmental standards, jobs and UK supply chains including British AI hardware, and security. In return, the document says, "a new Ministerial Control Centre will accelerate time to power for strategic data centres." It lists the tools: using new Planning and Infrastructure Act powers to reserve and reallocate grid connections, working with the National Energy System Operator (NESO) to find capacity before 2030, facilitating transfers of pre-2030 connection contracts, and a framework for temporary on-site generation that "will only be available for exceptionally strategic projects." The government will set out "in due course" how it defines strategic data centres and the further criteria they must meet. Reuters, in a report carried by CNA, described the covenant as requiring operators to invest in local communities, create jobs and protect water supplies "in return for priority grid connections and, where necessary, permission to build on-site power generation." Reuters quoted John Healey, whom it identifies as finance minister: "Built on sovereignty and security, I want to ensure that the British people can benefit from the huge potential upsides of AI." ## Limits - The press release says "investing £700 million"; the Budget document says "over £700 million." Neither breaks the total down line by line, so we have not summed the components. - The press release gives £30 million for local AI partnership pilots, while the Budget document's policy list gives £15 million for Local AI partnerships from 2026-27 to 2029-30. We could not reconcile the two figures. - The covenant's definition of "strategic" data centres and its extra criteria have not been published. We read the GOV.UK covenant page's summary, not the full covenant. - Healey's quote is taken from Reuters' report; we did not find it in the two GOV.UK documents we read. ## Sources - [GOV.UK (HM Treasury): Budget 2026: Breathing space for today, hope for the future (October 28, 2026)](https://www.gov.uk/government/news/budget-2026-breathing-space-for-today-hope-for-the-future) - [GOV.UK (HM Treasury): Budget 2026 (October 28, 2026)](https://www.gov.uk/government/publications/budget-2026-document/budget-2026-html) - [GOV.UK: Data Centre Covenant (October 28, 2026)](https://www.gov.uk/government/publications/data-centre-covenant) - [CNA (Reuters): UK's Healey offers grid access incentives for critical data centres (October 28, 2026)](https://www.channelnewsasia.com/business/uks-healey-offers-grid-access-incentives-critical-data-centres-6500146)