Britain can be a world leader in AI, but there’s one thing holding us back: our broken planning system. It no longer is enough to have top-notch universities, a skilled workforce, and fantastic businesses like DeepMind – Britain needs data centres too.
This is a problem because data centre projects keep getting refused by local councils. Take Buckinghamshire County Council’s decision to refuse planning permission to build a data centre on a former landfill site next to Britain’s busiest road, the M25.
This was actually the second attempt to build a data centre on the site. The first attempt, which would have brought a £2.5bn growth boost to Britain, was rejected in part because of its impact on views from motorway bridges. The developers tried again with a significantly scaled back proposal – more than half the size – but were rejected all the same.
There is no deep mystery to Britain’s economic stagnation. Forget NIMBY, the guiding principle of Britain’s economy is, as one major infrastructure investor recently put it, totally BANANAS. Build absolutely nothing anywhere near anything (or anybody).
Britain’s economic stagnation is infuriating because we get so much of the hard stuff right. Most countries would bite your hand off if you offered them the chance to have Oxford… and Cambridge… and Imperial. We aren’t perfect on regulation, but we aren’t like France which literally made it illegal for bookshops to discount books. And when it comes to regulating things like autonomous vehicles, gene editing, or small modular reactors, we are far ahead of Europe. Yet, Britain ends up less productive than the country where it’s illegal to be a driving instructor without owning a DVD player because we get the simple, but important stuff so, so, wrong.
It’s infuriating but it’s also a reason to be optimistic about Britain. A government determined to fix this and merely grant the private sector permission to build data centres on ex-landfill sites near motorways can swiftly move the dial on growth.
So, the recently announced plans of Labour’s shadow Science and Technology Secretary Peter Kyle to make it easier to build data centres should be welcomed.
Labour plans to designate data centres as ‘nationally important’ and drag them into the Development Consent Order regime where decisions are taken by Ministers in Whitehall, not local planning committees.
The logic for taking the decision out of the hands of local politicians is strong. Data centres are of national importance to the economy. The impact of a £2.5bn data centre investment in Buckinghamshire will have knock-on effects across the UK economy. If it is seen as simply too hard to build data centres in Britain, then jobs in AI, and tech more generally, will move overseas to countries that do not turn their noses up at multi-billion investments.
Yet, Labour’s plan is not without issue. While it is right that decisions are taken at a national level, there are big drawbacks to bringing data centres into the DCO system.
Speed is the obvious one. Even if Labour already has a draft national policy statement on data centres in their back pockets – and if recent Bloomberg reports are true, they may well have– it will still need to be consulted on and approved by Parliament. There was a 23 month gap between the publishing of the Conservatives’ draft National Policy Statement on Energy and the document being put before Parliament.
Then there’s the paperwork. Getting a Development Consent Order is an extremely bureaucratic and expensive task. National Highways have spent almost £300m navigating the process for a single road, the Lower Thames Crossing. To get permission to build an offshore wind farm off the coast of Yorkshire, Denmark’s Orsted produced an environmental impact assessment five times longer than Tolstoy’s War and Peace.
In a best-case scenario, a planning application will get a decision 18 months after first being submitted. And that doesn’t take into account all the time taken to get an application up to scratch in the first place.
Developers may still prefer a slow ‘Yes’ to a quick ‘No’, but there is evidence of developers avoiding the DCO process altogether if they can avoid it.
Look at solar. A large number of solar projects have a maximum capacity of exactly 49MW. Coincidentally, that’s the most powerful a project can be without being dragged into the DCO regime. Solar farms might be a controversial topic at the local level, but developers tend to prefer going the local route because national planning policy gives them a decent chance of success and the bureaucratic burden is much smaller.
I think there’s a couple alternative approaches Labour should consider taking.
To start, it is important to remember that taking decisions at a higher level doesn’t all of a sudden cause local objections to go away. Take the rejection of the Aquind Interconnector project, the decision to reject it was ultimately taken by then-Energy Secretary Kwasi Kwarteng, but it's hard to believe that strong opposition from local MP Penny Mordaunt didn’t influence it. Likewise, the final call on the original M25 data centre project was taken by the planning minister, not the local council.
To counter this, locals should benefit more from new economic developments in their area. Sam Bowman and Ben Southwood’s proposal to give councils the full (currently they only get half) business rates revenue from approving a project is, in my view, a no-brainer.
Labour might consider cutting out the DCO process and using another powerful tool they have at their disposal: special development orders.
It’s a tool that allows the government to grant planning permission to specific projects without the developer producing a normal planning application. It’s not used often, but has been used in the past to great effect. Notably, the transformative Cardiff Bay regeneration was created via a special development order. And interestingly, there were reports last week that Universal Studios are seeking a special development order to build a mega theme park in Bedfordshire.
Labour have another option: call-in powers. The Town and Country Planning Act 1990 grants the Secretary of State the ability to call-in and decide planning applications. To get data centres approved quickly, Labour could issue a Written Ministerial Statement specifying that it will ‘call in’ any data centre project that exceeds a certain investment threshold £100m. This would immediately send a signal to investors that planning will no longer be a barrier to getting data centres built.
Usually, ‘call in’ powers are exercised by the Levelling Up, Housing, and Communities Secretary but there’s no reason why this always has to be the case.
Obesity drug manufacturer Eli Lilly recently cited the planning system as one reason they didn’t open a factory in the UK. The US and Irish government attract investment, Eli Lilly’s CEO Dave Ricks explained, “by pre-reserv[ing] land, they promise to cut through the red tape and layers of government.”
So, why not give the Science and Technology Secretary the power to make planning decisions on major investments in data centres, drug factories and laboratories? After all, it’ll be the Science and Technology Secretary who will be meeting businesses like Microsoft, Eli Lilly and AstraZeneca trying to persuade them to invest in Britain.
On a related note, why not give similar powers to the Culture Secretary to make planning decisions on major film studios like the one that was going to be built on a quarry in Buckinghamshire, or give the Justice Secretary the power to call-in planning applications for new prisons?
There’s another benefit to giving DSIT and DCMS call-in powers. Ministers, and Departments as a whole actually, tend to see problems only in terms of the policy levers they have at their disposal. This can lead to an excessive focus on demand-side solutions such as subsidies, while supply side issues like regulation or planning get neglected. Granting departments call-in powers would change that.
Labour’s ambition to fix planning and beat back the blockers who turn away foreign investment is cause for cheer. But, there’s a risk that they’ll solve one problem blocking investment only to create another: forcing all data centre plans to navigate mountains of red tape. I think, to coin a phrase, Britain deserves better.
Excellent post!
I suspect dispatchable power generation capacity will cap our ambitions on this front.
Ireland is now rejection data centre applications due to its constrained generation capacity. It had planned for data centres accounting for 31% power by 2030, but its now on track for 32% by 2026.
In the UK, National Grid had planned for 6% by 2030, and it's overall demand forecasts are way off Ireland and the US.
Our de-rated dispatchable generation capacity is already below peak winter demand and looks to plummet in the next 5 years – a situation that will be significantly exacerbated if Labour follows through on its threat to veto new gas turbines.
Overall, I can't see how we manage existing demand, let alone facilitate a data centre drive.
https://www.ft.com/content/53accefd-eca7-47f2-a51e-c32f3ab51ad5
Let us hope that any new government will heed your advice. Too much concern for the comforts of life by the people already comfortable should be tempered by the needs of those who are uncomfortable, the poor, homeless, jobless, etc. Starmer and Reeves need to get the economy moving and make an early start on a living wage and minimum income requirements for all the population.