Special Briefing Note: What Budget 2025 Means for Local Authorities, Digital Infrastructure & Smart Places

Budget 2025 did not announce new standalone digital funds, but it fundamentally resets the environment for how local authorities should think about digital infrastructure, AI readiness, planning, and economic transformation. The clear message is: Digital infrastructure, data capability and AI readiness are now central to the UK’s growth strategy, and councils that prepare early will unlock investment, jobs and service transformation. 

Below is a summary of the most relevant measures for local authorities and how these changes affect digital and smart-place planning. 

1. AI Growth Zones Accelerated 

The Budget confirmed three new AI Growth Zones—North East, North Wales and South Wales—alongside measures to crowd in “tens of billions” in private investment. Planning reform, grid acceleration, and compute access are all positioned as enablers for local economic growth. 

Why it matters: Local authorities need clear strategies for digital infrastructure, data capability and AI use cases if they want to compete for future Growth Zone investment and anchor innovation in their region. 

2. National Compute Investment (Nearly £2bn) 

Government will invest up to £2 billion in national compute infrastructure and AI capability by 2030, including new supercomputing capacity in Edinburgh and an expansion of the AI Research Resource. 

Why it matters: AI-ready infrastructure—infrastructure, data platforms, sensors, fibre, 5G, edge compute—will become a core requirement for service transformation across social care, housing, transport and environment. 

3. Digital Infrastructure & Broadband 

Two announcements are particularly significant: 

• A new right for leaseholders to request gigabit broadband, and obligations on freeholders not to unreasonably refuse. 

• Work with Ofcom to support business gigabit adoption. 

Why it matters: Councils should revisit MDU connectivity gaps, digital inclusion strategies, and fibre-enabled regeneration plans. This strengthens the mandate for place-based digital infrastructure investment. 

4. Planning Reform to Accelerate Infrastructure 

The Planning & Infrastructure Bill prioritises national and regionally significant infrastructure—including data centres, digital assets and grid reinforcement—to accelerate growth. 

Why it matters: This is a clear prompt for councils to update spatial plans and identify strategic sites suitable for digital infrastructure, innovation districts and data-driven growth.

5. Digital Skills, AI Adoption & Innovation 

Budget 2025 confirmed: 

• A £187m TechFirst digital skills programme 

• Expansion of BridgeAI to support AI adoption in all major sectors 

• An “AI Growth Lab” for safe testing of AI, drones and autonomous systems 

Why it matters: Local authorities need to build organisational digital capability—skills, data governance, readiness and talent pipelines—to deliver future service models and adopt new technologies responsibly. 

6. Implications for Smart Places 

Although the term “smart cities” is not used, the Budget reinforces every element needed for smart and connected places: 

• Better connectivity 

• More sensors and data 

• AI-ready infrastructure 

• Upgraded planning and digital design 

• New funding pathways for innovation 

• Improved digital skills 

• Acceleration of grid- and compute-enabled local growth 

  
  

For councils already testing IoT (such as damp & mould, smart housing, community safety, traffic and waste), the Budget strengthens the national policy case for scaling these innovations. 

How Intelligens Consulting Can Support Local Authorities 

Budget 2025 signals a shift from grant-based digital projects to strategic, investment-led digital growth. Intelligens Consulting can help councils: 

1. Build AI Growth Zone readiness: Assess digital and data maturity, identify infrastructure gaps, and develop investment-ready strategies. 

2. Develop Digital Connectivity & Infrastructure Plans: Ensure fibre, 5G, sensors and data platforms are aligned with economic development and local priorities. 

3. Create roadmaps for AI-enabled service transformation: From social care to housing, environment and customer services. 

4. Strengthen organisational digital capability: Skills, culture, digital duty readiness and digital maturity assessments. 

5. Accelerate smart-place delivery: Business cases, funding models, commercial partnerships and procurement pathways. 

Final Thought 

Budget 2025 is not a digital spending budget, but it is a strategic digital growth budget. Councils that proactively align their digital infrastructure, data strategy and AI plans with this direction will be best placed to secure investment, deliver economic growth, and modernise public services.