Marcus Emadi | Director at Turning Point Capital
CONTENTS
Labour’s pro-infrastructure stance fuels optimism, but challenges around power, planning, and land remain
Six months into its term, the UK’s new Labour government is signaling a decisive shift in how it views digital infrastructure—and the data center sector is already feeling the impact.
Earlier this month, Deputy Prime Minister Angela Rayner approved a previously blocked 140MW data center project in Iver, Buckinghamshire. Overruling local objections about the site’s location on Green Belt land, Rayner emphasized the project’s strategic importance in meeting the UK’s growing data needs. The decision reflects Labour’s campaign promise to take a more flexible stance on using protected land for digital infrastructure.
A similar ruling is now awaited in Hertfordshire, where a 96MW facility in Abbot’s Langley is under public inquiry following a local rejection. Together, these decisions will test Labour’s willingness to follow through on its pledge to prioritize tech-enabling infrastructure—even in the face of resistance.
A New Tone from Westminster
This approach marks a significant shift from the previous Conservative government, which focused more on courting AI developers than on building the underlying infrastructure to support them. While the UK positioned itself as a global AI hub, real estate and power grid constraints meant many large-scale data center proposals stalled in planning deadlock.
Labour, by contrast, has committed to reforming the planning system to expedite such projects. But the challenges ahead are complex. London, already one of Europe’s largest data center markets, must confront limited land, regulatory bottlenecks, and power supply concerns if it’s to support continued growth.
The Strength—and Limits—of the London Market
London remains the most dynamic of Europe’s FLAPD markets (Frankfurt, London, Amsterdam, Paris, Dublin), boasting 1.3GW of IT capacity and another 170MW in development. Analysts point to relatively light regulation and better ability to “bring your own power” as advantages over cities like Frankfurt and Dublin.
But Niccolò Lombatti, a digital infrastructure analyst at BMI, highlights three significant constraints in the capital:
- Grid Connection Delays – Local grid queues managed by the Greater London Authority slow down development timelines.
- Land Shortages – Competing needs from the housing sector make commercial real estate increasingly scarce.
- Delivery Lead Times – Equipment procurement and power activation delays are especially acute in dense areas like Docklands.
Green Belt to Grey Belt: A Changing Landscape
To bypass urban limitations, developers are increasingly looking beyond London’s traditional data center strongholds in Slough and Docklands.
In Havering, East London, developer Digital Reef is planning a 600MW campus on 175 acres of Green Belt land. Though controversial, the £5.3 billion project promises to deliver massive capacity and includes a £116 million investment in the Warley substation to support power needs with renewable energy from North Sea wind farms.
Eleanor Alexander, managing director at Digital Reef, says the company’s strategy has proven forward-thinking: “Power is key. We needed a site with grid connectivity that could sustain a true digital ecosystem.”
Other hyperscale players are following suit. Google is investing £757 million in a site in Waltham Cross and has acquired land in Essex for future development. Kao Data, meanwhile, continues to expand its Harlow campus.
Pushback from the Public
Yet despite government backing, community resistance remains strong. In Havering, residents and campaigners argue that large-scale developments on Green Belt land represent a “creeping industrialization” of the countryside. Environmental concerns, truck traffic, and low job creation all factor into the opposition.
“There is less community support for data centers in London than in the other FLAPD markets,” says Lombatti. “Residents are more aware of power strain and often don’t see tangible benefits.”
Labour hopes that new policies—such as redefining parts of the Green Belt as “grey belt” to enable development near major roads—will balance these tensions. Planned reforms to the National Planning Policy Framework (NPPF) would also give councils a mandate to identify sites for digital infrastructure and potentially allow fast-tracking of major data center projects as Nationally Significant Infrastructure Projects (NSIPs).
However, planning experts warn that change will take time. “The proposed NPPF revisions may take years to influence supply,” says Nick Finney of planning consultancy Arup. “The NSIP process offers certainty but is resource-intensive—likely only viable for the largest campuses.”
From Hillingdon to Yorkshire: A National Footprint Emerges
While London remains a hub, the geography of the UK’s data center industry is shifting. Microsoft is developing campuses in Yorkshire and Lincolnshire, while Colt DCS has major facilities in Hertfordshire and plans to double its footprint in Hayes, West London.
Matthew Cantwell, director at Colt DCS, says local engagement is as important as national reform. “We’ve worked closely with Hillingdon Borough Council to make our Hayes expansion a win-win for the local economy. It’s that kind of relationship that helps unlock opportunities.”
Cantwell welcomes Labour’s stance, especially efforts to unlock clean energy. “Power allocation at key substations is already booked through 2029,” he warns. “If we want more capacity online, we need grid investment now.”
The Road Ahead
For developers like Digital Reef, Labour’s reforms come too late to impact their current projects—but they offer hope for future investments. “The UK’s digital economy is a huge opportunity,” says Alexander. “We just need the infrastructure to go with it.”
In the short term, the next big test for Labour’s data center strategy will come with the decision on the Abbot’s Langley site. But longer term, developers, operators, and investors alike will be watching closely to see whether the government’s rhetoric can be translated into a new era of scalable, sustainable digital infrastructure.
