The Data Looks Positive: Revised NPPF Addresses Datacentres and Recognises Importance for Strategic Economic Growth

United Kingdom

Summary  

The early Christmas present of a revised National Planning Policy Framework (“NPPF”), published on 12 December 2024, has the planning world talking. Voted into power with a resounding 156 seat majority, the newly elected Labour government has been keen to get some big ticket (and in some cases controversial) proposals out early. The changes to the NPPF are set to reflect this government’s commitment to economic growth, which has been centred on development.

Key targets for this growth are proposals for a modern tech-focussed economy and nowhere is this more relevant than in the hot-topic of datacentres. The requirements for more and more data storage solutions to meet the needs of a modern population, as well as the boom of AI, have led to datacentres being classed as Critical National Infrastructure (“CNI”), alongside the energy and water sectors.

This has now been further reinforced by Sir Kier Starmer’s speech yesterday, where he unveiled the government’s ‘AI Opportunity Action Plan’ and promised to ‘move fast and take action to win the global race’ on AI. The action plan will also look to utilise AI Growth Zones (“AIGZs”) – areas with enhanced access to power and support for planning approvals, to accelerate the build out of AI infrastructure.

This Law-Now addresses the changes made to the NPPF for the provision of datacentres; and this government’s attitude towards them as a pillar for future economic growth.

Background

Consultation on the revised NPPF was opened on 30 July 2024 and closed on 24 September 2024. Proposed changes included implementing a positive expectation that suitable sites for digital infrastructure projects should be identified by local authorities in local plans and be supported in decision making; and allowing datacentre development to fall within the Nationally Significant Infrastructure Project (“NSIP”) regime.

Support for datacentres in engrained in this government’s plans, evidenced by the Chancellor’s speech made on 08 July 2024 which addressed the fact that it is vital that planning policies reflect the country’s broad economic and infrastructure priorities, including supporting rapidly-advancing commercial opportunities such as datacentres.

Changes to the NPPF

The previous NPPF made no specific reference to datacentres when requiring planning policies to set criteria or identify strategic sites for local and inward investment (previous paragraph 86(b)). The revised NPPF rectifies this as follows:

Planning policies should…pay particular regard to facilitating development to meet the needs of a modern economy, including by identifying suitable locations for uses such as laboratories, gigafactories, data centres, digital infrastructure, freight and logistics (paragraph 86(c)).

This is a variation from the proposed consultation draft, which would have mandated that appropriate sites for commercial development be identified, and instead now requires the slightly lower bar to be met, of paying of “particular regard”, as above.

However, this provision still creates a positive expectation that suitable sites for these types of modern economic uses are identified in local plans.

A further reference is made to datacentres at paragraph 87 of the revised NPPF, by replacing reference to the need for storage and distribution operations at a variety of scales and in suitably accessible locations, with the following:

This includes making provision for… new, expanded or upgraded facilities and infrastructure that are needed to support the growth of these industries (including data centres and grid connections).

Paragraph 87 also includes the following provisions which were not included in the previous NPPF:

This includes making provision for: (b) storage and distribution operations at a variety of scales and in suitably accessible locations that allow for the efficient and reliable handling of goods, especially where this is needed to support the supply chain, transport innovation and decarbonisation; and (c) the expansion or modernisation of other industries of local, regional or national importance to support economic growth and resilience.

Paragraph 87 aims to support the development of the digital infrastructure sectors by giving more explicit recognition to the need for local planning authorities to support proposals for new or upgraded facilities, and the infrastructure that is required for growth. It is expected that this will, in time, be a requirement for emerging local plans.

NSIP Regime

The government’s NPPF consultation also questioned if the government should go further, by enabling digital infrastructure projects to opt into the NSIP regime, and thereby have their applications assessed and decided centrally by the Planning Inspectorate and the Secretary of State, rather than at local level. To support the proposed changes, the government consulted specifically on the potential for data centres to be prescribed as a type of business and commercial NSIP and as such be able to be directed into the NSIP consenting regime through a section 35 direction, on request and subject to certain conditions.

In response to the consultation, the government has decided that the proposals to prescribe data centres, laboratories, and gigafactories should be pursued, due to the overall favourability of responses and important role that these types of development are to play in supporting the government’s mission for economic growth.

It should be noted that no explicit provision is made in the revised NPPF for the prescription of datacentres as NSIPs, and this would need to be dealt with as a separate workstream. However, the government’s affirmative response in relation to the question in the consultation suggests that there is a future for section 35 directions being made to direct datacentre developments into the NSIP regime.

Initial thoughts

There is now an expectation that local plans will include provisions driving the development of datacentres forward, although it remains to be seen how effectively local planning authorities will adhere to this or how quickly. With Sir Keir Starmer noting that ‘the AI industry needs a government that is on their side, one that won’t sit back and let opportunities slip through its fingers’ – the planning world will be expected to play a conducive role.

Further support by the government for datacentre development is evident in Angela Rayner’s recent decision to overrule Buckinghamshire Council’s decision and approve proposals for a 140MW development at Court Lane Industrial Estate. The decision noted that failure to meet the need for this site could have significant negative consequences for the UK digital economy.

The NPPF is always the realm in which politics and planning meet. Governments can rapidly make changes to the NPPF and are often keen to use it as an opportunity to set their administration’s policy intent early doors.

Labour are clearly keen to flex their muscles to deliver their mandate, and to be seen as the growth administration. Time (and future planning applications) will tell how effective, and popular, this will prove to be. However, including explicit provisions for datacentres in the NPPF and making provisions for datacentre developments to fall within the NSIP regime, are surely both positive moves for datacentre developers, and should further remove barriers for their development, alongside their designation as CNI.

The incorporation of AIGZs will be an interesting development with the government looking to trial the first of these at Culham, the headquarters of the UK Atomic Energy Authority who are looking for a private sector partner to develop one of the UK’s largest AI data centres with plans to scale up to 500MW. If this public/private model is a sign of things to come it could supercharge development of the sector in the UK.

Article co-authored by Sophie Bunker, Trainee Solicitor at CMS.