What does a change in power mean for the UK data centre sector?

This year is election year for many parts of the world and changes in leadership invariably bring with them many promises of change, and a new or renewed focus on how to deliver growth. This is already evident in the UK.

The new government’s vision for Britain is firmly centred on ‘change’ and among its proposals is an encouraging commitment to invest in building new data centre infrastructure. This commitment is intended to support economic growth and harness the power of Artificial Intelligence (AI). It is news that every part of the data centre sector will be welcoming but building new sites is only one part of the challenge; the bigger issue – and the one that will have the most significant impact on growth – is a shortage of talent.

Building the infrastructure

Before looking at the issue of labour, let us first consider why we need more data centres in the first place. The government has stated that it will streamline the process for establishing additional data centres nationwide. This comes in response to warnings about a shortage of infrastructure to meet growing demands for cloud computing and AI. In pursuit of its goals, planning policies are being revised and data centres are to be designated as nationally significant infrastructure projects.

As data centres assume greater importance as ‘nationally significant infrastructure projects’ in the UK, this aligns with a critical juncture in the new UK government’s digital transformation journey. As the government departments and the public sector increasingly adopts digital technologies, including AI, there arises a corresponding need for expanded data centre capacity to manage the growing volume of data generated.

With this new elevated status and growth opportunities seemingly being offered on a plate, it is down to the sector to act now to avoid being the architect of its own missed opportunity. Because to deliver growth the sector not only needs buildings, but it also needs skills, it needs people and it needs them now, and in numbers.

The labour shortage challenge is not new, and perhaps it is one that’s so often referenced that people have become immune to the warnings. If the problem wasn’t acute already, then it certainly will be in the future, which means action needs to be taken now, especially since Labour has elevated datacentres.

'Nationally significant infrastructure projects'

Before coming into power, Labour stated that innovation needs to be converted into commercial success in every corner of the UK. Its new industrial strategy will support the development of AI by removing planning barriers for new data centres. Additionally, a National Data Library will be established to consolidate existing research programmes and facilitate the delivery of data-driven

public services. This initiative will ensure robust safeguards are in place to guarantee that the benefits are shared by all.

‘Nationally significant infrastructure projects’, a status traditionally reserved for airports, power plants, and vital transport networks, are overseen by the Planning Inspectorate, allowing them to bypass local authorities, which means circumventing local council objections to their construction. This is expected to open up areas of the green belt allowing for the construction of data centres at key locations in commercially dense urban areas, including the outskirts of London.

The green belt surrounding the UK capital and officially spanning over one million acres, serves as an attractive location for data centre development due to its ample land area and proximity to London – and people. This initiative is anticipated to focus predominantly on a west London data centre ‘corridor’, recognised as the largest data hub globally outside the United States.

Estimates suggest there are between 3001 and 5002 data centres in the UK, predominantly concentrated around London. The easing of planning restrictions brings hope that we will quickly see more significant investments plans being announced for the UK which will follow the likes of Microsoft’s £2.5 billion development of AI data centre infrastructure across the UK by 2026.

Sustainable growth for a sustainable sector

The acceleration of AI will also require investment in renewable energy sources, energy-efficient equipment, and advanced cooling technologies to manage carbon footprint. According to the National Grid, data centres currently account for approximately 1.4% of the nation’s total electricity consumption. Demand was already projected to increase by 500% over the next decade.

While Data centres have long been subject to the challenges of power constraints in the UK, the reclassification of data centre projects suggests large investments in renewable energy sources by 2030 - including wind (onshore and offshore), solar power, carbon capture, hydrogen, and marine energy. These efforts aim to address power constraints for data centres and ensure long-term energy storage.

The UK government’s digital transformation of its own departments and services is likely to be replicated around the world. Tony Blair’s Institute for Global Change is certainly championing the potential of technology, especially the new developments in AI, with governments around the world position it as a route to turbocharge growth3.

The emphasis on AI underscores the need for the Labour government to proactively foster and implement targeted policies that address Britain’s productivity challenges. In fact, real estate consultancy CBRE projects that data centre capacity in London alone will jump 17% this year4.

Extending an industrial strategy to include people

Labour's commitments in the UK acknowledges the pivotal role data centres play in bolstering AI and digital innovation and underscores the synergy between cutting-edge technology and essential infrastructure.

Perhaps what is missing, however, and should also be part of the government’s industrial strategy, is a similar commitment to investing in the people and the skills needed to manage and operate the new centres it is aiming to build. We need to avoid an ‘empty box’ scenario where we have all the buildings, but none of the people to run them.

That said, relying on government to fix the skills shortage will not in itself address the challenge. As an industry, we need to be playing our own part, and what happens next largely depends on the business leaders shaping the growth plans and the people they can recruit to deliver it. This will require some thinking outside of the ‘data centre box’.

We will not find sufficient talent from the existing pool and will need to be bold and look further afield, to industries and people with transferable skills. As the home of the internet, we need to make the data centre industry more visible and therefore attractive to a new generation of worker, who can align with their ambition for delivering a better, more sustainable future.

Footnotes: 1 https://www.datacentermap.com/united-kingdom/ 2 https://www.statista.com/statistics/1228433/data-centers-worldwide-by-country/ 3 https://www.thetimes.com/article/2ea961e3-c7aa-4674-aaf3-eb717b59dbb8?shareToken=2ba9a44d43c7b95690b145d77518a2a7 4 https://www.cbre.co.uk/insights/books/uk-real-estate-market-outlook-2024/data-centres