UK Chancellor introduces British datacentre covenant

UK Chancellor John Healey has announced the ‘British datacentre covenant’ as part of the Autumn Budget 2026. The policy makes priority grid connections and faster planning permissions for datacentres conditional on meeting strict requirements regarding community investment, local job creation, apprenticeships, and the protection of local water supplies.

The initiative aims to address public backlash and development pauses in regions like Scotland. Healey framed the covenant as a way to secure national sovereignty, ensuring that data used by the NHS and armed forces remains within Britain. The move comes as the UK faces a growing pipeline of 173 datacentre projects with over 14GW of capacity, driven largely by artificial intelligence demand.

The budget also includes a broader AI package, allocating £500m for AI safety and security, £140m for a sovereign AI unit, and funding for advanced chip design at Edinburgh University.