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An IT company used by the Government to handle sensitive NHS and military data has been taken over, months after civil servants were told to prepare for its collapse.

UKClouds rescue comes amid concerns that the public sector has become over-reliant on Amazons giant cloud computing arm, which has been awarded hundreds of millions of pounds in taxpayer contracts.

UKCloud, which last year warned that it needed a cash injection of 30m to keep operating, has been taken over by an investment vehicle led by its chairman Jeff Thomas.

The company said the deal would help boost confidence among taxpayer-funded customers, after the Cabinet Office told them to make contingency plans.

UKCloud, based in Farnborough, provides cloud computing services such as data storage and processing to central government, defence and the NHS. It is seen as a UK-based alternative to the US giants of Amazon, Microsoft and Google, ensuring that data is stored in Britain and could not be transferred abroad.

However, it warned last year that it needed further investment to keep operating and to pay taxes and debt. UKCloud recorded a 17.9m loss in 2020 and appointed advisers to secure new investment.

Mr Thomas, the founder of data centre company Ark, has acquired a majority stake in UKCloud through his investment company Hadston 2. Existing investors, the venture capital firm BGF and US investor Digital Alpha, have also put more money in.

The company did not reveal a price, although it is believed to be around the 30m needed to keep operating and fund its investments.

Simon Hansford, the companys chief executive, said the company planned to expand into the Middle East, seeking contracts with governments that wanted data to be stored domestically.

Mr Hansford said there was a disproportionate amount of money that is being spent on a single hyperscaler, referring to Amazon.

You want a vibrant British tech industry, we are the people that are spending money in the UK, creating jobs, social value. I'm employing and paying taxes and my staff are paying their money here. That's not the case necessarily with one of the big American[companies].

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British cloud computing company used by Government rescued from collapse - Telegraph.co.uk