Following the calling-in of two data centre planning applications in July, Deputy Prime Minister Angela Rayner has now approved plans for a new data centre on 'green belt' land on one of those sites in Buckinghamshire. What does this tell us about the Labour government's attitude toward data centres and the digital economy?

Labour's approach to planning

The Labour Party has made it clear in their manifesto that boosting economic growth is a priority and will be central to their plans. Labour have demonstrated that they understand the key role that digital infrastructure, and data centres in particular play, when Angela Rayner overturned the local authority planning rejections relating to the development of a data centre in Buckinghamshire on economic grounds due to a lack of alternative sites. Planning Minister Matthew Pennycook explained in a letter that, whilst the Deputy Prime Minister agreed that the development on 'green belt' land was 'inappropriate', she also recognised that it was "an optimal site and location for data centre use and there is a clear lack of alternative sites available at present to meet the demand for such data centres". The site is currently an industrial estate, with a mix of occupiers from vehicle storage, scrap metal recycling, and office uses. There is Grade II listed building but used as a multi-tenant office building.

The newly granted permission suggests that planning restrictions may be loosened in favour of economic growth. The written ruling from Ms Rayner held that the harm to the 'green belt' was 'clearly outweighed by other considerations', these being economic growth and the impact on the UK digital economy.

The power to 'call in' decisions

The power to 'call in' a planning decision and recover planning appeals is given to the Secretary of State under the Town & Country Planning Act 1990. A call-in power is exercised when the Secretary of State issues a direction to a local planning authority meaning that, before a decision is made, it will be determined by the Secretary of State. A recovery power occurs when a developer has their planning permission refused by the local planning authority and the Secretary of State chooses to recover the appeal.

Historically these powers have been used sparingly, generally to address a conflict between local policy and national policy on important matters so, for example, those policies might not yet have made paper, they might just be within a manifesto, it might just be the government's latest thinking, or if a decision might have significant long-term impacts on the economic growth. Therefore, the use of these powers could be good news for job growth or investment potential. They might have significant effects beyond the local area, and the government is indicating that local authorities are perhaps taking a parochial, rather than national, view.

One issue with using these powers is that it takes away the autonomy of local authorities. Local authorities like to determine what is going to be built and operated in their locality. However, when there is a potentially controversial development that the community is really objecting to, it can actually help a local authority counsellor to have that decision taken off them so that, come election time, they are not seen to have acted against the wishes of their constituency.

What is the future of planning in the UK?

The long-term aim for the Government should be to amend the infrastructure planning regime. The existing regimes of the Town & Country Planning Act 1990 and the Planning Act 2008 leave room for data centre development to be brought into infrastructure planning legislature, meaning it is determined by central government, rather than local authorities. However, making such amendments can take a very long time and until they are passed, developers lack the clarity and security that it would bring.

One medium term approach is to have a National Policy Statement setting out the various planning policies for data centres. Even with this, the issue is that parliamentary approval and amending of the 2008 Act would also be required.

Another option as a quicker fix is a ministerial statement. In 2012 we had a statement from the government setting out the considerations when deciding call-ins; a similar statement covering the considerations for data centres would make sense from the Labour government. This could either set out the parameters that will be considered, forcing local authorities to do the same, or it could simply require that data centres of a certain size or capacity must automatically be referred to the Secretary of State for determination. This approach would still keep the local enquiry however it would take the decision away from the local authority and leave it with the central government.

What does this mean for the data centre sector in the UK?

London is the largest data centre market in Europe and demand for supply is still growing, leading to a recent spate of announcements of new facilities across the UK. Evidence like that from Tech UK's report from November 2024, suggests that data centres are positively contributing to the economy with £4.7 billion in Gross Value Added (GVA) and 43,500 jobs added to the UK economy, along with £640 million in tax revenue to the exchequer. The Labour government have heard and understood the economic growth that these facilities enable, the UK's current leading position and can see that data centres are also crucial if the UK wants to lead in the global artificial intelligence (AI) race.

These changes to the planning process will be a welcome easing of what was previously a difficult process when looking to identify sites for the development of data centres. The government involvement is reassuring to developers as it shows willingness to override local fears and dislike of data centres and a more strategic focus on the digital services (including AI) that data centres enable.

Whilst a simplification of the current planning system will be a positive change by increasing land availability, it does not fix the bigger problem of the lack of power available to data centres. There are already parts of the UK where there is no more power availability for years to come. These kinds of lead times and delays on connection with the National Grid pose a greater concern than planning restrictions and mean that, before developers can make the most of eased restrictions, the government also need to address access to power and upgrades to the National Grid.

Overall, the recent call-ins, and subsequent reversal of the refusal, make clear that the government is prioritising the economic opportunities that data centres can bring over the protection of areas of land which are less directly 'green belt', bringing renewed opportunities for investors, developers and operators. If you'd like to discuss any of the points raised in this article, please contact Jocelyn Paulley or Ben Stansfield.