The publication of both the Data Centre Covenant and the draft National Policy Statement for Data Centres signals a clear intention: to further accelerate the delivery of digital infrastructure required to support AI, economic growth and national resilience. The Government is seeking to ensure that the UK remains in an advantageous position to capture the benefits of the digital economy, whilst minimising environmental impacts and maximising local benefit.
Data centres have been increasingly viewed as enabling infrastructure that underpins AI deployment, public services, economic competitiveness and national security. The Government estimates that the UK will require around 6GW of AI data centre capacity by 2030 – approximately 3 times current capacity and considers additional domestic capacity essential to maintaining the UK's position as a leading global AI economy. However, there is growing resistance to data centres, particularly within local communities who are asked to house them, and who have significant concerns about their environmental, economic and social impact. Mindful of these potential barriers, the Government has proposed a new approach to facilitate the delivery of what it considers as nationally important infrastructure for UK Plc.
The Data Centre Covenant
At the heart of this new approach is the Data Centre Covenant, which establishes a set of expectations for the sector. Strategic data centres that comply with the Covenant may benefit from direct Government support to accelerate delivery, including assistance with planning and grid connections.
The Covenant is built around five principles:
- Supporting lower electricity bills and grid resilience.
- Investing in local communities.
- Meeting high environmental standards.
- Creating jobs, apprenticeships and skills opportunities.
- Strengthening national security and cyber resilience.
Many of these commitments reflect existing areas of good practice. However, one aspect stands out in particular: the expectation that strategic data centres should prepare Local Benefit Plans involving substantial investment in the communities that host them.
Why a Covenant?
One of the more intriguing aspects of today's announcements is the Government's decision to adopt a Covenant model. Covenants are relatively uncommon within planning and infrastructure policy and are more frequently used where Government wishes to establish a shared set of commitments and behaviours across a sector rather than impose new regulatory requirements.
Another interesting aspect of the Covenant is that it resembles a negotiated compact between Government and industry. The Government clearly recognises that the UK requires a substantial increase in data centre capacity if it is to realise its ambitions for AI, digital services and economic growth. This isn’t anything new for those working on data centres proposals. Equally, it recognises that the infrastructure needed to achieve those ambitions may face increasing scrutiny from communities, politicians and decision-makers concerned about energy demand, water consumption, environmental impacts and the use of scarce development land.
The Covenant therefore seeks to strike what is effectively a deal with the industry. In return for Government support, data centre providers are expected to demonstrate leadership in addressing the environmental and social impacts of development. The Covenant asks operators to invest in local communities, minimise water consumption, improve energy efficiency, create jobs and apprenticeships, support the transition to clean power and enhance national resilience. In return, Government is prepared to play a more active role in helping strategically important projects overcome some of the barriers that have historically constrained delivery, including planning delays and access to electricity capacity.
An interesting challenge for the planning system
While the principle of community benefit is unlikely to prove controversial, the mechanism through which it is secured may be.
The Covenant explicitly suggests that strategic data centre developers should go beyond traditional planning obligations such as Section 106 agreements and the Community Infrastructure Levy (CIL). Yet planning obligations remain subject to established legal tests. Contributions must be necessary to make the development acceptable, directly related to the development and fairly and reasonably related in scale and kind.
This raises an important question: how will local authorities secure the wider community investments envisaged by the Covenant?
Many of the examples cited by Government, such as investment in parks, town centres or broader community initiatives, could fall outside the scope of what can lawfully be secured through planning obligations unless a direct relationship to the development can be demonstrated.
A possible solution may be a system of voluntary community benefit arrangements sitting alongside, rather than within, the planning process. Similar approaches already exist within parts of the energy sector. However, the detail remains unclear and further guidance from Government will be required if the approach is to be applied consistently.
The draft National Policy Statement
Alongside the Covenant, the Government has published a draft National Policy Statement for Data Centres, creating a dedicated policy framework for the largest and most strategically important facilities.
If adopted, the NPS would provide a formal statement of national need and establish the policy basis for decision-making on nationally significant data centre infrastructure. Importantly, it reflects the Government's view, and indeed the data centre industry, that substantial growth in data centre capacity is required to support AI deployment and economic growth.
The draft NPS also signals a clear desire to accelerate delivery by providing greater certainty for investors, infrastructure providers and decision-makers. By establishing a presumption in favour of granting consent that goes beyond the levels of policy support offered by the NPPF, the draft NPS may encourage larger and more ambitious projects to come forward; a trend seen for solar energy projects as a result of similar policy provisions within corresponding NPS documents.
Although the NPS is principally aimed at nationally significant infrastructure, its influence will almost certainly extend much further. Once adopted, the NPS will become a material consideration in the determination of conventional planning applications. This is consistent with the approach taken to other National Policy Statements, which are routinely referenced by local planning authorities and Inspectors when considering proposals below NSIP thresholds.
A policy and political boost for data centre developments?
The combination of the Data Centre Covenant and the draft National Policy Statement for Data Centres sends a clear message to the market: notwithstanding growing scrutiny of the sector's energy consumption, water use, carbon impacts and wider effects on local communities, the Government remains firmly committed to expanding the UK's data centre capacity and positioning the country as a global leader in AI and digital technologies.
Perhaps the most interesting aspect of today's announcements is not the specific policy measures themselves but the approach. Rather than relying solely on planning reform or market forces to deliver additional capacity, the Government has chosen to go further and establish what amounts to a new partnership with industry. Through the Covenant, it is effectively offering a deal: if developers are prepared to address environmental concerns, invest in communities, create jobs and skills, and support wider national objectives, Government will use its powers to help accelerate delivery.
This approach reflects a recognition that the scale of data centre development required over the coming decade will depend not only on investor confidence but also on public confidence. The Covenant seeks to provide a framework through which the benefits of growth are more visible to host communities, but it remains to be seen how this will play out in practice. Alongside it, the draft NPS seeks to provide greater policy certainty that nationally important projects can secure consent. Together, they amount to an attempt to create the market conditions to achieve the Government’s ambition of significant expansion and delivery – although that delivery should be achieved responsibly, with environmental impacts minimised alongside the creation of lasting benefits for the communities that host.
29 October 2026
