This article was written by both Ashley Collins and Rachel Mushet of Montagu Evans

At a public inquiry in February last year, it was agreed that there was an overwhelming UK need for data centers, that the need was immediate and of national importance, that data centers were critical infrastructure to support the digital economy, and that the proposed site, a former landfill, was the only place the proposed hyperscale data center could go.

Despite this, the then Secretary of State decided these factors were not enough to overcome the Green Belt planning policy and, amongst other things, the perceived harmful views from a bridge over the M25.

It was clear from this seemingly irrational decision that national planning policy in this country had not kept pace with one of the most dynamic and fast-growing industries in the world.

Government departments such as International Trade and the Department for Science, Innovation, and Technology (DSIT) strongly support data center developments as they represent significant investment value for the country, from both UK operators expanding their existing activities or building new sites, and inward investment by multinationals. They generate high-value-add technical and engineering jobs to the market and provide the kind of cloud operations and services that will enable our continued transition to an efficient, digitally enabled future.

The National Industrial Strategy, Plan for Growth, UK Digital Strategy, UK National Data Strategy, and a host of other government publications all made direct reference to the digital economy and the infrastructure required to support it. But without translating this thinking into explicit planning policy direction, the delivery of these opportunities was uncertain.

Now, change is coming. Data centers are finally recognized in the latest round of proposed planning changes following the General Election.

Addressing Labour’s manifesto promise to remove “planning barriers to new data centers,” the revised National Planning Policy Framework (NPPF) has landed for consultation with a new approach that should address the current challenges of delivery across the country. It is an indication of this government’s commitment to one of the most important sectors of the UK economy.

Direct support for data centers

The current NPPF makes reference to “clusters of knowledge and data-driven, creative or high technology industries” but this hasn’t been explicit enough, and trusted guidance has not been provided to local authorities.

The proposed updated paragraph 85a unambiguously highlights data centers and grid connections, and that planning policies and decisions should support the delivery of this key infrastructure. In addition, updated paragraph 84b now sets out the need for appropriate sites for commercial development that will meet the needs of a modern economy including specifically data centers, plus laboratories, gigafactories, digital infrastructure, freight, and logistics.

Green Belt and Grey Belt changes

These additions to the NPPF also place greater emphasis on Local Planning Authorities adopting planning policies and making decisions on planning applications to recognize and address the specific needs and locational requirements of data centers. This change comes as the market has moved towards the cloud and a hyperscale model. The consequence of this model is that greater land take-up is required, and this has limited the number of opportunities that align with the exacting operational and business requirements of the data center providers. For London, this has put pressure on the Green Belt where development is only allowed in Very Special Circumstances.

A further freeing up of the planning system comes with a softening of what constitutes inappropriate development, specifically on land in sustainable locations and where it utilizes the newly termed ‘Grey Belt.’ We would like to see tighter drafting of the policy so there is a clear pathway for data center development on Grey Belt land whilst also balancing the important need for homes and other forms of commercial development but this is a helpful move forward.

Nationally significant infrastructure projects

As part of the current NPPF consultation, the government is asking whether the sector would support the introduction of measures that would allow data center developments to be consented under the Nationally Significant Infrastructure Projects (NSIPs) process.

NSIPs were introduced to streamline the consenting process for large-scale infrastructure schemes of national importance as part of the Planning Act 2008, including for energy, transport, water, wastewater, and waste development.

Instead of applying to a Local Planning Authority for planning permission, developers would apply directly to the Planning Inspectorate for a Development Consent Order. This would mean that data center proposals would be assessed by an Examining Authority in public and decided by the Secretary of State.

The role of power

We should be proud that London is the largest data center market in Europe but there is a very real risk of losing this position due to the uncertainties that have historically been associated with the planning system and accessibility to power.

Combined with the government’s ongoing efforts to reinforce and decarbonize the grid to ensure there is sufficient access to clean and affordable power, data centers could be the catalyst for increased investment in the renewables sector. There is currently a conflict between market forces and a clunky planning system, but data centers can unlock vast environmental and social benefits when properly planned and integrated into the built environment.

Responding to the consultation

This specific reference to data centers in the NPPF should now remove planning as a barrier to the growth of the industry in England and ensure that their importance in driving economic recovery is given very significant weight in the decision-making process for planning applications.

We support the government's ambition to streamline the consenting process for data centers and welcome the recent changes to the NPPF as a positive development. We strongly advocate for a fully resourced, market-oriented, and flexible consenting process to enable data centers the speed to market. The industry’s desire to invest in the UK is strong, and an efficient and responsive NSIP process could be the solution to capture this investment.

To further support the industry, we would also welcome the creation of a new Use Class within the existing Order – e.g. B8 (data centers). This will maintain the ability for data centers to be directed towards existing industrial estates and allocated employment land, whilst also recognizing that the buildings have their own unique profile which differentiates them from other developments. For instance, data centers are good neighbors and do not give rise to significant amenity issues which can be a concern when it comes to traditional industrial/logistics uses.

But at this point, the NPPF is in draft for consultation and therefore these changes are not yet secured. The consultation is open to all until its end date of 24 September. We encourage the industry to respond proactively, collaborating with the government to embrace these reforms and advocate for economic growth. This is a crucial opportunity to capture positive change and drive the sector forward.

To respond to the consultation: https://consult.levellingup.gov.uk/planning/planning-reform/