Chancellor John Healey’s announcement of a datacentre covenant drew fire from campaigners and industry alike after Wednesday’s Autumn Budget. Critics branded the centrepiece of the government’s AI infrastructure push a voluntary smokescreen that binds big tech to nothing.
The covenant, published by HM Treasury on 28 October, made priority grid connections and, where necessary, permission to build on-site generation conditional on strict tests around local investment, jobs, water and the environment. Strategic datacentres will be expected to agree a Local Benefit Plan, protect water supplies, capture waste heat and pay their fair share of energy costs in return for a faster route to power.
The covenant lists five tests. Datacentres should:
- Pay their fair share of energy costs so households and businesses do not pick up the bill.
- Invest in improving local communities.
- Adhere to the highest environmental standards.
- Create jobs, apprenticeships and reindustrialisation.
- Strengthen Britain’s security.
The grid measures are reserved for strategic datacentres, whose definition is still to come.
Healey framed the offer around sovereignty, arguing 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.
The government estimates the UK needs 6GW of AI-capable datacentre capacity by 2030 and casts the covenant as a clear offer – faster delivery of the datacentres the country needs in exchange for responsible development. Measures include reserving and reallocating grid capacity for strategic projects, and a tightly controlled framework that permits on-site generation only for exceptionally strategic sites.
The covenant and a draft National Policy Statement (NPS), published the same day, are two parts of the same strategy. The covenant sets out the five tests datacentres should meet, and that strategic datacentres must meet to qualify for faster grid connections and on-site generation. The NPS, from the Department for Business, Innovation, Science and Trade, turns those tests into assessment criteria the Planning Inspectorate and the Secretary of State will apply when deciding development consent for schemes of 100MW and above.
Campaigners unconvinced by covenant
John Ridd, co-founder and chief executive of Greenpixie, said the covenant was “a smokescreen designed to appease local resistance to AI infrastructure”, adding that the requirements Healey claimed were new “already exist, but Big Tech is never held accountable”. He said the average datacentre “employs fewer people than a local supermarket” and urged the government to increase capacity through efficiency, “not just be railroaded into building more datacentres”.
Oliver Hayes, head of campaigns at Global Action Plan, said the chancellor “is in for a shock” if he thinks communities “will be hoodwinked by a voluntary ‘covenant’ that could have been written by Big Tech themselves and explicitly allows for power generation from heavily polluting on-site fossil fuels”. He added: “Voluntarism doesn’t work with these companies.”
Foxglove head of communications Tom Hegarty said there “does not appear to be a single legally binding environmental commitment” in the document. He described it as “voluntary at best for Big Tech” while strategic datacentres would be handed “a golden ticket to skip the grid connection queue”. He said the charity would keep challenging datacentres in court.
One campaigner at the sharp end – currently battling a Wiltshire County Council decision to grant consent to the Spring Park datacentre being developed by Ark Data Centres – felt the covenant’s provisions may make little difference.
Morgyn Davies of the Neston & Westwells Action Group (NWAG) said: “When legal agreements between developers and councils are signed in secret, behind closed doors, something much tougher than a ‘voluntary covenant’ is needed to guarantee communities do not suffer a catastrophic tomorrow so the developer can make a massive profit today.”
Industry voices welcoming but uneasy
James Hart, chief executive of BCS Consultancy, said the covenant was “a welcome recognition of the strategic importance of digital infrastructure” but “the deal is lopsided, with clear obligations for developers but less certainty around what government can deliver in return”.
“A covenant doesn’t build substations,” he added. Chris Coward, BCS’s chief operating officer, warned that continued grid uncertainty “pushes developers towards alternative power solutions, particularly on-site gas generation”.
Rich Kenny, managing director of datacentre efficiency specialist Interact and chair of the IEEE Water Resource Technologies Working Group, said the covenant was “a move in the right direction so long as it has enough teeth to ensure those local benefits are delivered when promised”.
Datacentre builders welcome elements
Giles Hanglin, chief executive of UK-based clean energy and datacentre developer Apatura Energy, said the proposed Ministerial Control Centre and its powers to reserve and reallocate connections was “the strongest measure set out” in yesterday’s Budget, but warned that “if that takes months, the fast lane will not be fast”.
Matthew Baynes, vice-president of secure power and datacentres for equipment supplier Schneider Electric in the UK and Ireland, said the commitment to prioritising grid connections for critical datacentres was “particularly encouraging”.
The covenant lands weeks after MSPs in Scotland voted to pause planning decisions on large datacentres until national guidance arrives. Scotland’s committed pipeline has grown to 14 schemes and 2.4GW, the fastest growth of any UK region, while the grid connection queue, rather than planning consent, remains the binding constraint on much of the UK pipeline. Ireland shows what happens when development outruns the grid.
