A "vote of confidence": the UK government welcomes a spate of investment in UK data centres

The UK government has welcomed plans from four operators to invest £6.3 billion in UK data centre infrastructure, announced on Monday as part of the government’s International Investment Summit, as a “vote of confidence” in the UK.  Speaking at the Summit, Peter Kyle (Science and Technology Secretary) hailed the investment as proof that “tech leaders from all over the world are seeing Britain as the best place to invest with a thriving and stable market for data centres and AI development”.

The investments include:

• CloudHQ’s plans to develop a new £1.9 billion data centre in Didcot, Oxfordshire;
• ServiceNow’s plans to invest £1.15 billion in its UK business over the next five years;
• CyrusOne’s plans to invest £2.5 billion in UK data centres over the coming years, including in new data centre builds; and
• CoreWeave’s plans to invest a further £750 million in the UK.

The investments follow hot on the heels of the government’s designation of data centres as Critical National Infrastructure last month (more on that here) – which CyrusOne’s chief executive credited as giving his company “confidence to continue its expansion in the UK”.

These are the latest in a wave of recent investments in the UK data centre sector – including Blackstone’s planned £10 billion investment to create Europe’s biggest AI data centre in Northumberland and AWS’s planned £8 billion investment in the sector over the next five years.  

Unlocking this scale of investment in the sector has been a key priority for successive UK governments.  The new data centres will provide additional storage capacity and computing power, in turn supporting the development of next generation AI technologies.  At the same time, we’re continuing to see significant investments in making UK data centres more sustainable and efficient: Virgin Media announced a partnership last month with EkkoSense to make data centre cooling energy savings of around 15% at 20 key UK data centre sites, and Kao Data began work earlier this month on a new £350m data centre in Greater Manchester which will use 100% certified renewable energy.  That may be part of the answer to the power dilemma we have discussed previously (see here).

Challenges remain for the industry, and we think that getting the regulatory landscape right over the next couple of years is going to be a very careful balancing exercise, requiring ongoing dialogue between the government, investors and industry players.  It’s clear that reshaping regulatory systems to boost innovation and investment is a key priority for the government - Keir Starmer told executives at the Summit that “the key test for me on regulation is growth […] Is this going to inhibit or unlock investment?”, and his government recently announced a new “Regulatory Innovation Office” tasked with removing barriers to innovation across the system (more on that in our recent blog here).  

This recent wave of activity is a very promising sign that increased regulatory focus on data centres as a critical part of the digital economy does not need to hamper investment in the sector – instead, it can (and should) unlock the investment that this dynamic sector needs to keep innovating and growing.  

Slaughter and May’s Tech, Digital and Data practice, together with its IEN practice, advise the full spectrum of digital infrastructure companies.  For more information, please see our website and/or contact James Cook, co-head of our cross-practice Technology Group.