Views

NPPF View – A policy revolution for UK Data Centres

Government confirms support for Data Centre development.

It is widely acknowledged that there is an unprecedented demand for Data Centres in the UK which is completely outstripping supply. The lack of national planning policy recognition to support the development of Data Centres has been a major obstacle to delivery. Following years of campaigning and lobbying from across the sector, the critical importance of Data Centres has now been formally recognised, at the national policy level, through the publication of an updated National Planning Policy Framework (NPPF) for consultation. This significant policy update follows hot on the heels of the Deputy Prime Minister’s recovery of two significant Data Centre appeals in Hertfordshire and Buckinghamshire. Through the recovery of these appeals, Angela Rayner has demonstrated the critical importance the Government attaches to the delivery of Data Centres in the UK.

The lack of national planning policy recognition to support the development of Data Centres has made decision-taking at the local level uncertain and ambiguous. The shortfall and delay in Data Centre delivery is culminating in a shortage of space to meet the ever-increasing needs of cloud computing and AI. It is considered that there is a need for over 2.5GW of new supply over the next five years in the UK, with current supply being well short of meeting this requirement. This has put at risk the ongoing digital transformation taking place across financial services, life sciences, healthcare, education among many other critical industries and services. The updated NPPF has now formally documented the critical nature of Data Centres in the UK. For too long, major Data Centre Investors have considered the challenges, complexities and uncertainties around planning in the UK to be a major obstacle to investment. Labour have recognised that to be a global leader in data innovation and AI, a positive national policy position is required to deploy the necessary underlying physical infrastructure.

The updated NPPF consultation document (30 July 2024) confirms the contribution of Data Centres to the UK economy, being an estimated £4.6bn in revenue each year in the UK (2021) and forecast to support a UK tech sector worth an additional £41.5bn and 678,000 jobs by 2025.

The NPPF consultation proposes updates to existing paragraphs 86b) and 87 of the existing NPPF. Updated Paragraph 86b) requires Local Plans to identify suitable sites or locations for Data Centres. Updated Paragraph 87(a) further supports the development of knowledge, creative, high technology and data-driven sectors, by giving more explicit recognition of the need to support proposals for new or upgraded facilities and infrastructure (including Data Centres and electricity network grid connections) that are key to the growth of these industries. Specifically, this policy requires local plans to recognise and address the specific locational requirements of these sectors. These specific references to Data Centres represent a significant policy shift, creating a supportive policy position for the sector.

Crucially, the consultation goes further by asking whether Data Centres should be prescribed as types of commercial development which could be capable (on request to Secretary of State) of being directed into the Nationally Significant Infrastructure Project (NSIP) regime. An alternative route through planning, using the NSIP route, would help remove much of the ambiguity experienced at the local decision-making level. It also provides Data Centre proposals with a clearer more logical approach to consenting at the central Government level, with decisions being taken in light of Data Centres’ significant economic impact and potential to drive substantial growth.

The updated NPPF for consultation, will provide a huge boost of confidence for the sector. As advocated for by so many industry leaders, over so many years, the updated NPPF would provide a long overdue policy backbone. There is now a tangible basis for the Data Centre industry to ‘legitimise’ itself in the UK, with a solid platform for UK plc to cement itself as a global player in cloud computing, AI and broader technology sectors. 

It’s now time for the industry to respond. Consultation closes on 24 September 2024.

JLL benefits from a wealth of experience in respect to Data Centres, offering a 'cradle to grave' service that includes site finding, site selection, planning, advisory, transactions, and facilities management. To discuss any of the matters discussed above or any other planning matter, please contact the team.