A boost for data centre development

Joanna Fox focuses on the potential opportunity for data centres created by proposed planning reforms. Planning reform has been a prominent topic in the headlines since the general election, with Rachel Reeves putting planning front and centre in her first speech as chancellor and draft revisions to the National Planning Policy Framework published in July. The shortly anticipated publication of the updated NPPF, and the Planning and Infrastructure Bill which will follow in 2025, has generated significant interest. While much of the discussion has centred on housing, the implications of these reforms extend far beyond residential development, and will facilitate commercial development in key sectors such as data centres, which have been recognised as critical national infrastructure, forecast to support a UK tech sector worth an additional £41.5bn and 678,000 jobs by 2025. The NPPF The revisions to the NPPF make it clear that planning policy should identify strategic sites for data centres and digital infrastructure to support investment and ensure that the needs of a modern economy can be met. The NPPF also recognises the specific location requirements that data centres have, such as the size of sites, their proximity to urban development and their grid connection requirements. The initiative to relax restrictions around development in the green belt merits attention from data centre developers. Although the primary aim is to release land for housing, commercial development will also benefit if the NPPF drafting on the green belt is more finely calibrated to support other forms of development. The revisions to the NPPF provide for reviews of green belt boundaries where local planning authorities are unable to meet their development needs. Where it is necessary to release green belt land for development, the release of previously developed land and grey belt land should be considered before other green belt land is considered for release. In all instances, any land released should be in sustainable locations. In addition to this, the revisions strengthen the presumption of development on brownfield land by stating that it should be regarded as acceptable in principle. This presumption is consistent with the government’s plans to introduce “brownfield passports”. Planning in action Alongside these reforms, as signalled by Rachel Reeves and reiterated by housing secretary Angela Rayner and housing and planning minister Matthew Pennycook, the government is going to make full use of the intervention powers available to ministers. Demonstrating its commitment to development on previously developed land in the green belt, the newly renamed Ministry of Housing, Communities and Local Government has recovered two appeals for large data centres for ministerial determination – a 65,000 sq m data centre in Buckinghamshire and an 84,000 sq m facility in Hertfordshire. In both cases, the relevant council concluded that the development would be inappropriate in the green belt when refusing the initial applications. Nationally significant infrastructure projects regime The government is considering enabling digital infrastructure projects, including data centres, to opt into the NSIP regime. This flexibility arguably already exists under the Infrastructure Planning (Business or Commercial Projects) Regulations 2013, which outline business and commercial projects that may qualify for the NSIP regime. The ability to use the unified development consent order regime could be advantageous for certain data centre projects, particularly those requiring large areas of land and long grid connection routes in urban areas. However, developers should have flexibility, as collaboration with key stakeholders can lead to more agile routes to consent through the Town and Country Planning Act 1990 regime. The data centre sector would benefit from updated guidance to clarify which projects are covered by the existing 2013 regulations and to instil confidence in this current system for projects being directed into the NSIP consenting regime. Future prospects As we anticipate the publication of the NPPF and the Planning and Infrastructure Bill, there may be promising developments ahead with some adjustments to the draft NPPF. By unlocking land that makes a limited contribution to the purposes of the green belt and strengthening the presumption of development on brownfield land, the reforms could facilitate the development of data centres and associated infrastructure. At the very least, we should expect to see strategic sites for data centres and digital infrastructure coming forward. However, a significant issue that remains is the lack of clarity around the appropriate use class for data centres. This uncertainty needs to be addressed by the government to aid local planning authorities in their decision-making processes and to provide commercial certainty for landowners and developers. Despite this challenge, confidence in the UK’s data centre sector remains strong. Hertsmere Borough Council in Hertfordshire is currently considering an outline planning application for a £3.75bn data centre. The proposal has the potential to create more than 700 jobs and support 13,740 data and tech jobs across the country, showcasing the critical role that data centres play in the modern economy. Joanna Fox is a senior associate in the planning and environment team at Ashurst LLP Photo by Panumas Nikhomkhai/Pexels