Hours after Chancellor of the Exchequer, John Healey delivered his first budget, the Department for Business, Innovation, Science, and Trade issued its initial proposal for a National Policy Statement (NPS) for Data Centres.
The NPS is a planning document that sets out the national need for data centres and a policy framework to be used when making decisions about Nationally Significant Infrastructure Projects (NSIPs). It is intended to provide greater certainty for developers, local authorities, and planning inspectors when assessing major proposals.
The document is presented as a draft and is now subject to consultation running until 8 January 2027.
The NPS contextualises the requirement for additional data centre capacity, the economic significance of the sector, and the Government’s support for the deployment of additional storage.
Whilst the driver of the publication of the NPS is to provide a policy framework for the consideration of data centres (and co-located energy generation) as NSIPs, it may represent a material consideration in the consideration of applications progressed under The Town and Country Planning Act 1990.
The most striking aspect of the NPS is the introduction of a ‘presumption of consent’ for data centres when progressed as NSIPs so long as:
- The proposal meets the relevant NPS requirements necessary for the granting of development consent;
- The mitigation hierarchy has been applied, and all residual impacts are those which cannot be avoided, reduced or mitigated; and
- All relevant legal and regulatory requirements are satisfied.
On the second point above, and where residual effects remain, the NPS still states that refusal should be exceptional.
The NPS specifies that the presumption of consent does not apply to proposals for data centres in the Green Belt. Here, the requirement to demonstrate compliance with Policy GB7 of the NPPF or, that Very Special Circumstances outweigh Green Belt harm, remains in place.
In his Budget announcement, Mr Healey specifically referenced the establishment of a Data Centre Covenant. This framework identifies five key contributions that strategic data centre applications seeking enhanced Government support must demonstrate. Data centre applications progressed under the Town and Country Planning Act 1990 are also encouraged to align with these contributions. These are:
- Lower electricity bills;
- Invest in improving local communities;
- Adhere to the highest environmental standards;
- Create jobs, apprenticeships, and drive reindustrialisation; and
- Strengthen Britain’s security.
The NPS also sets an indicative minimum threshold of 100 MW for consideration as a NSIP. Progressing proposals with an IT capacity above this through the NSIP process continues to be at the applicant’s discretion. The NPS is clear that proposals with lower IT capacity will also be considered on their merits.
Nick Heard, associate director at Savills, commented: “It is positive to see the publication of the draft NPS. The presumption of consent reinforces the Government’s commitment to supporting the continued expansion of the sector, with the exclusion of land within the Green Belt being notable. Many applications already perform well against the five elements of the Data Centre Covenant, but it is challenging to see how a data centre proposal can lower electricity bills without exporting waste heat or funding upstream grid improvements. Likewise, there is a lack of detail about what a Local Benefits Plan should include, how it would be controlled, and how its value is derived."