Chancellor promises new tests for data centres after Northumberland 'pincer movement' fear

Chancellor John Healey used his Budget to announce a new covenant, requiring data centres to meet certain standards – including to minimise their water use and provide direct benefits to local communities.

It comes after widespread national concern over the proliferation of data centres because of the land, water, and energy needed to accommodate them.

There have been particular worries about south east Northumberland, where US firm QTS is building a £10 billion facility at Cambois and a further two applications are under consideration by the county council.

Blyth and Ashington MP Ian Lavery recently called on the Prime Minister to issue a moratorium on such developments in his constituency, fearing that they would take up “scarce industrial land that could be used for other industries that create far more local jobs”.

Mr Healey told the House of Commons:“To ensure our most sensitive data stays under British control, I am setting out a new deal for datacentres in the UK. 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. So here’s the deal.

“I am today launching a new British data centre covenant with strict tests that data centres must meet – to invest in local communities, create local jobs and protect local water supplies. In return, critical data centres will get the grid connections they need, and, where necessary, be allowed to build onsite generation while they wait.”

Speaking to the Local Democracy Reporting Service afterwards, Mr Lavery welcomed the pledge – but said that the “devil is in the detail” of this new covenant.

The veteran Labour MP said: “We have to listen to the residents much more than we have been. We have to make sure that residents are involved in a multitude of ways in any potential AI data centres. This has been my concern, apart from the environmental concerns and the electricity capacity and infrastructure concerns.”

He added: “I need to understand what this AI data centre covenant actually means. But, broadly speaking, it does address the issues I have been raising and I am pleased with that – but I am not sure whether it could cover the impact of having three or four data centres within two square miles.

“That is the big issue for me. I support QTS and the £10 billion investment into the region, of course I do. But I am less than happy with the fact that there is a pincer movement around QTS with other data centres and we need to get to the bottom of that.”

Northumberland County Council leader Glen Sanderson called the QTS plans at Cambois a “perfect example of how to make data centre development work”.

He added: “If it is done right and carefully then data centre development is absolutely crucial for a new economy and a new generation of people.”