In his Autumn Budget, UK chancellor John Healey has made priority grid connections for datacentres conditional on strict tests around community investment, local jobs and water supplies.
This British “datacentre covenant” comes as Westminster takes in a datacentre backlash that has paused development across Scotland, and seen protests and petitions spring up across the UK.
Healey said the covenant would require operators to invest in local communities, create local jobs and protect local water supplies before winning faster grid connections and, where necessary, permission to build on-site generation.
He framed the need for datacentres around sovereignty, and argued that when the NHS uses artificial intelligence (AI) to treat patients, or the armed forces use it to keep the country safe, that data should stay in Britain. He cast the covenant as a new deal for datacentres, promising the grid connections operators need in exchange for the local consent they have struggled to win.
The move comes amid a ballooning datacentre pipeline that has grown to 173 projects and more than 14GW of capacity, driven by AI demand, and large sites in Scotland and the North East.
“I’m today launching a new British datacentre covenant with strict tests that datacentres must meet to invest in local communities, create local jobs and protect local water supplies,” said Healey.
The covenant formed part of a wider AI package in the first Budget of Andy Burnham’s government, which added £500m for AI safety and security, £140m for the sovereign AI unit, and an AI Challenge Prize for public services. It also set aside £18m for advanced chip design led by Edinburgh University and £6m for the Glasgow Scottish Event Campus.
It landed weeks after MSPs in Scotland rejected a Green call for a full moratorium, but voted to pause planning and consenting decisions on large datacentres until national guidance arrives by Christmas, with environmental impact assessments now required for any scheme of more than 50MW.
The vote followed a summer in which the SNP’s national council backed a moratorium and ministers intervened in individual schemes. Scotland’s committed pipeline has grown to 14 schemes and 2.4GW, the fastest growth of any UK region.
Opposition to datacentres has been evident in recent weeks. A petition against a datacentre at Little Bollington in Cheshire passed 1,000 signatures this week, and campaigners are urging rejection of a 700-acre solar and datacentre development in West Norfolk. The grid connection queue, rather than planning consent, remains the binding constraint on much of the pipeline, and Ireland already shows what happens when development outruns the grid.
For datacentre operators and the enterprise buyers that depend on them, the covenant offers a trade: commit to local benefits and win a faster route to power.
Whether those strict tests satisfy the communities now organising against individual schemes remains the open question.
