Government plans to impose “strict tests” on data centres before they can be built have had a cautious welcome in an area that could soon host three of them.
In Wednesday’s Budget speech, Chancellor John Healey said new centres would face requirements to “invest in local communities, create local jobs and protect local water supplies”.
The bargain being offered
It is a trade, and the chancellor was explicit about both sides of it. If companies invest locally, create jobs and protect resources, they “will get the grid connections they need and, where necessary, be allowed to build onsite generation while they wait”.
That second clause is the valuable one. Grid connection queues are the binding constraint on data-centre construction in Britain — we reported this month that Microsoft walked away from the country’s largest planned AI data centre, with grid timelines stretching into the 2030s. Permission to generate your own power while waiting is worth more to a developer than any planning concession.
So this is not simply a restriction. It is a queue-jump in exchange for local obligations, which is a more interesting policy than “strict tests” suggests.
Healey also gave the sovereignty argument: “When the NHS uses AI to treat patients, we want that data here, when our armed forces use AI to keep us safe, we want that data here.”
Where this lands first
Northumberland County Council has already given US firm QTS the go-ahead for a £10bn facility at Cambois, and is considering two more applications.
The council’s Conservative leader Glen Sanderson said the sector was “absolutely critical” for the economy. Of the QTS plans: “If it is done right and carefully then data centre development is absolutely crucial for a new economy and a new generation of people.”
The local Labour MP welcomed the pledge but warned the “devil is in the detail”. Last month, Blyth and Ashington MP Ian Lavery called on the prime minister to regulate developments like those in his constituency, fearing they would take up “scarce industrial land that could be used for other industries that create far more local jobs”.
Speaking after the Budget, Lavery said: “We have to listen to the residents much more than we have been.” The chancellor’s pledge “broadly speaking does address the issues” being raised, he said — but he was “not sure it could cover the impact of having three or four data centres within two square miles”.
The gap Lavery is pointing at
It is a real one, and it is the most useful thing in the story.
Tests of this kind are applied per application. Each facility can demonstrate that it invests locally, creates some jobs and does not exhaust the water supply on its own. Three or four of them in two square miles can each pass that test while together producing an effect none of them individually causes — on the grid, on water, on the industrial land available for anything else.
Lavery’s original objection makes the land point sharply. A data centre costs a great deal to build and needs very few people to run: the construction phase employs many for a while, the operating phase employs a handful indefinitely. “Create local jobs” is therefore a test a data centre passes easily and an electronics factory on the same site would pass far better.
Why this is worth watching from here
Because the same offer will be made in this region, and probably soon. The pattern is consistent across the countries we have covered — the grid arithmetic behind Scotland’s 23 hyperscale proposals, and a water protest at a data-centre compound in Batam — and the question each government faces is the same: what is extracted in return for land, power and water.
Britain has now written an answer down. Whether it holds is a matter of detail, and the detail is not published yet. The three things worth checking when any such policy arrives are whether the tests apply cumulatively or one by one, whether “local jobs” means construction or operation, and who audits the water commitment after the building opens.
