Subscribe to the Data Center Knowledge Newsletter
Get analysis and expert insight on the latest in data center business and technology delivered to your inbox daily.
What the New UK Government Means for the Country’s Data Center Sector
The UK’s new Labour government has pledged to make it easier to build data centers. Experts weigh in on what else is needed to stimulate industry growth.
6 Min Read
Image: Alamy
When the UK woke up to a new government on July 5, it didn’t exactly come as a shock. The polling in the lead-up to the election was so unfavorable that it would have been a bigger surprise had Conservative Party leader Rishi Sunak somehow emerged victorious.
So, while it is still early days, what can data center developers and operators expect from the new government? And what should be top of the Labour Party’s agenda to support the nation’s digital infrastructure sector?
One of the first items on the new government’s agenda has been to explore amendments to building planning permission regulations, which have increasingly hindered construction in the UK, even on brownfield land.
For example, as the election was in full swing, Buckingham Council turned down permission for a data center on a former landfill site next to the M25 motorway on the grounds that it would affect the green belt.
The new Labour government has indicated it will broach the issue of planning reforms by reclassifying data center developments as “nationally significant infrastructure projects,” making it easier for them to secure planning permission.
Moreover, the new Chancellor of the Exchequer, Rachel Reeves, has made it clear that planning reform is at the top of her agenda.
“Nowhere is decisive reform needed more urgently than in the case of our planning system. Planning reform has become a byword for political timidity in the face of vested interests and a graveyard of economic ambition,” she said in her first speech as Chancellor.
Acting as a strong indicator that changes may indeed be underway, Deputy Prime Minister Angela Rayner’s first decision on arrival at her new office was to recover two data center planning appeals in Buckingham and Hertfordshire for re-assessment.
You’ve Got the Power
Elsewhere in Westminster, on his first day in office, Secretary of State for Energy Security and Net Zero Ed Miliband greenlit three major solar farm projects that had been held up amid strong local opposition and eased restrictions on onshore wind projects.
Indeed, what often hinders data center developments in the UK is the availability of power, said Forrester Research senior analyst Alvin Nguyen. “And demand for power has increased dramatically due to generative AI,” he added.
British Prime Minister Kier Starmer and Deputy Prime Minister Angela Rayner. Since taking her new role in July 2024, Raymer has recovered two failed proposals for new data center projects.
For Paul Mellon, operations director at Stellium Data Centers, planning regulations are more of a barrier in the south of England. In the north of the country, where Stellium is based, the availability of power, not planning, is more important as operators seek to roll out high-performance compute (HPC) capacity to support the growing demand for AI.
“There are a lot of potential deployments of HPC, and that’s been escalating over the past 12 months,” says Mellon. It’s not a question of space inside the data hall, but outside with the need to massively upgrade and expand supporting infrastructure, he said.
“When you deploy HPC, you go from between four-to-10 kilowatts per rack, to 50 kilowatts or beyond. In a data hall where you would have had 100 racks consuming around 500 kilowatts, those 100 racks will now be consuming close to 6MW,” Mellon told Data Center Knowledge.
“Externally, in your plant compound, the amount of equipment and space required will double – and not all data center operators will have the space,” added Mellon. “Most are challenged for car parking, never mind additional plant and equipment. So, externally, you’ll need a bigger footprint.”
That will require new conversations with local authority planning departments, Mellon said.
Data Security in an Insecure World
While energy and physical infrastructure improvements remain a core concern for the UK’s data center industry, Mellon identifies the issue of security as the first item on his wish list for the new government.
“There [are] about 125 cable landing stations located around the UK,” he said. “Most of them connect islands to the mainland, but there are large clusters that provide the backbone of internal and external communications to the UK These are on a beach somewhere, highly exposed. They don’t have high security and if they go down it would be catastrophic.”
Energy and security are high on the list of priorities for UK data center industry professionals following the 2024 General Election.
From an operations perspective, Mellon also urged for a reassessment of the National Grid’s Targeted Charging Review, the residual charges covering the fixed costs of maintaining the UK’s electricity transmission infrastructure. These charges are high in the north of England, but London gets off comparatively lightly, argues Mellon.
When it comes to UK digital infrastructure security, Uptime Institute executive director of research, Andy Lawrence, has a slew of concerns.
“The previous government was beginning to understand and map out some of the big issues around critical national infrastructure, resilience, and energy security, and even some of the really thorny issues like AI. It is important that this work continues,” Lawrence told Data Center Knowledge.
“But what the data center industry needs most is a secure, reliable, and plentiful supply of low-carbon energy. The new government’s energy policy looks encouraging, but investment needs to be encouraged in every way possible,” he added.
Read more of the latest news about data center regulations
Brexit also entails several residual issues, such as standards. Mellon believes it makes sense for the UK to remain broadly aligned with the European Union on the issue of standards, rather than the US.
Lawrence agrees. “The government may not wish to replicate exactly all the environmental laws, for example, but it should ensure that data center suppliers and operators have some kind of equivalence to ensure that trade can flow freely,” he said.
While there are strong indicators that the incoming government will remove some barriers to digital infrastructure planning projects, Peter Hirsch, head of sustainability at 2150, a climate tech venture capital firm, said any regulatory changes must maintain a sharp environmental focus.
“The next government must send clear and predictable market signals to support an economically competitive and resilient industrial sector, powered by green solutions,” said Hirsch. “Long-term planning will give investors the confidence to invest in the UK, and innovative startups and founders the assurance they need to build their businesses here. Direct technology mandates, reliable phaseout timelines, and streamlined regulatory processes must be set in stone.”
All Change
After a little over two weeks, it’s too early to tell what impact the new Labour government will have on the UK’s data center sector.
After all, much can change over a five-year term as the previous administration – starting with Boris Johnson promising to “get Brexit done”, continuing with COVID, and ending with Rishi Sunak announcing a snap election in the pouring rain – demonstrated in abundance.
Read more about:
EuropeAbout the Author
You May Also Like
