Infrastructure Planning (Business or Commercial Projects) (Amendment) Regulations

Baroness Pinnock Excerpts

Tuesday 18th November 2025 Grand Committee

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, these regulations were laid before the House on 15 October.

The Government have identified data centres as essential infrastructure, necessary to support, grow and develop the UK’s economy. Data infrastructure now underpins almost all economic activity and innovation, including the development of AI and other technology, and it is increasingly critical for public service delivery and for how citizens interact with each other and the state. That is why data centres are crucial to delivering on the UK’s industrial strategy, and why the Government designated data centres as critical national infrastructure in September 2024, putting their loss or compromise on the same footing with essential services such as energy, water, transport and other critical national infrastructure sectors.

The Government are committed to ensuring that the planning system effectively facilitates development to meet the needs of a modern economy, including digital infrastructure such as data centres. Following the National Planning Policy Framework and other planning system reforms consultation last year, the Government announced plans alongside the publication of the revised NPPF in December of that year to enable certain projects within high technology and data-driven industries to be capable, on request of the developer of a project, of being directed into the nationally significant infrastructure projects process.

These regulations deliver on that announcement by effectively adding data centres to the existing nine prescribed projects—such as manufacturing, distribution, sport and tourism—that are set out in the Schedule to the Infrastructure Planning (Business or Commercial Projects) Regulations 2013. This would mean that certain proposed data centre projects could be capable, on request, of being directed by the Secretary of State to proceed through the NSIP consenting process under Section 35 of the Planning Act 2008, rather than having to proceed through the Town and Country Planning Act 1990 route.

It is important to stress that the regulations do not require any or every proposed data centre project to proceed through the NSIP route—far from it. The regulations just provide an opportunity for developers of certain proposed data centre projects to choose, should they so wish, to request to opt in to the NSIP consenting process, rather than going through the Town and Country Planning Act route.

I also wish to make it clear that, having received a qualifying request from a developer under Section 35ZA, the Secretary of State could decide to direct a data centre into the NSIP regime only if they considered that the project or proposed project was of national significance and met the other requirements in Section 35. The Department for Science, Innovation and Technology is drafting a national policy statement for data centres, which will set out both the national policy and the policy framework for decision-making for data centres. It will also set out the parameters, thresholds or other relevant factors that may indicate whether a particular data centre development proposal could be regarded as being of national significance and, therefore, capable of meeting the requirements of Section 35. DSIT aims to publish the draft national policy statement for public consultation and parliamentary scrutiny shortly after these regulations come into force.

To summarise, what we are discussing today is the mechanism by which certain data centre proposals—those deemed to be of national significance—may choose, subject to the Secretary of State’s decision on whether to give a direction, to opt in to a different planning route, the NSIP consenting process route, rather than going through the Town and Country Planning Act planning process. The SI before us enables developers to request that their proposals be considered under the NSIP regime, subject to the Secretary of State giving a direction to that effect.

I hope that the Committee agrees that these changes are sensible steps in ensuring that the planning system is flexible enough to adapt to emerging priorities. I beg to move.

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for her explanation of this statutory instrument, which, as she said, enables the development of data centres using the NSIP regime. As Liberal Democrats, we understand and support this in principle. However, the Secondary Legislation Scrutiny Committee’s report raises important concerns. These are that

“the ability of affected local communities to make representations”

with regard to a data centre application via the NSIP process seems to be curtailed by using the NSIP regime.

As the Minister will know, I have raised this issue many times throughout the passage of the Planning and Infrastructure Bill. It is, I believe, a serious concern—one that I share with the Secondary Legislation Scrutiny Committee’s report. The reason is that there will no longer be a statutory requirement for a pre-application consultation with the affected community. Consequently, communities may not be aware of an application and may not be able to register in time to voice their concerns at a hearing.

As well as the concerns raised by the Secondary Legislation Scrutiny Committee, I have the following questions for the Minister. First, this statutory instrument would have made more sense if the promised national policy statement had been introduced, even in draft form. It is much more difficult to scrutinise this SI without the policy statement. That was also raised by the Secondary Legislation Scrutiny Committee, so when is that likely to be published?

Secondly, can the Minister confirm that national planning policy, such as green belt policy, will be fully observed in relation to the siting of data centres?

Thirdly, do the Government intend to develop a spatial energy strategy to create a framework within which data centres can be developed? On the face of it, that seems adjacent to the purpose of this SI, but data centres consume a considerable amount of energy and, unless there is a spatial energy strategy, having too many data centres in one place could put pressure on the national energy system. For example, the existing data centres currently need 1.4 gigawatts of energy. As a country, I think we produce about 30 gigawatts a day, so data centres will use a big chunk of that energy.

Fourthly, given the energy that data centres use, they will produce a lot of heat. Either they will have to negate this in some way, or, as I would prefer, local heat networks will have to be set up in conjunction with data centres so that domestic users nearby can use free energy, because they would be doing a good deed for the data centres by using this waste heat. A great number of homes could benefit—up to a million, it is estimated—by using this energy that is currently being produced.

The fifth and final question—I apologise that I have so many questions—concerns the water usage of data centres. There is anxiety that the huge use of water by data centres, especially if they are developed in water-stressed areas, will result in even greater pressure on water supplies for domestic and other commercial uses. Can the Minister confirm that any new data centres will be required to have what is called a closed loop system of water use? I think that is self-explanatory.

What investigation has been undertaken into the use of what is described as grey water? For instance, because of sustainable urban drainage, many sites now have to put in attenuation tanks in order to take the run-off and hold it back before distributing it to the natural networks. It would be innovative if attenuation tank water could be part of the closed loop system, using grey water to cool down data centres, with the heat exported to households; it would be a win-win-win.

I know that the Minister will be very grateful for all the questions I have asked. If I have asked for answers that she does not quite have at her fingertips today, I would be grateful if she could drop me a note with the answers. With that, we Liberal Democrats support this SI in principle.

--- Later in debate ---

[Baroness Taylor of Stevenage (Lab)]

I thank the noble Baroness, Lady Pinnock, and the noble Lord, Lord Jamieson, for their contributions to this debate on the SI. I shall try to address all their questions; if I miss any, I am sure that they will let me know, and I shall respond in writing to them.

First, to pick up on the issue of the publication of the national policy statement, which I know is a concern that both noble Lords have expressed, we do not anticipate any significant gap between the SI coming into force and the publication of the draft national policy statement. If for some reason the gap is more pronounced, any projects subsequently directed into the NSIP regime will be considered in the same way as any other business or commercial project under Section 105 of the Planning Act 2008.

When the NPS arrives, it will set out which types of data centre infrastructure are considered of national significance—I think that is an issue that the noble Lord, Lord Jamieson, raised. That includes details of any thresholds and parameters, such as size or other relevant factors, as well as relevant policy background—including the needs case for data centres. The national policy statement is currently under development and testing. Given the time it may take to comply with statutory requirements for the designation of a new national policy statement, it was considered appropriate to lay the statutory instrument in advance, because we know how quickly this industry is moving and we want to make it possible to deliver data centres as quickly as we can.

The proposed national policy statement for data centres will be the very first national policy statement to be prepared covering a prescribed type of business or commercial project. We are working on that at speed. If there is no national policy statement in place, the Planning Act 2008 will apply, as I said. I hope that that clarifies when we are expecting that to come forward.

I know that the noble Lord, Lord Jamieson, also mentioned grid capacity. He knows that I have been working very closely with DESNZ colleagues—I do not have the net zero brief anymore, but I continue to take a great interest in this. My colleagues in DESNZ understand that grid capacity is not just an issue around data centres; it affects the whole construction industry. We need to move at pace to make sure that we have grid capacity to meet needs going forward. DESNZ is actively working on that, and I am sure it will make further announcements in future on that subject.

The noble Baroness, Lady Pinnock, mentioned some issues around the environmental sustainability of the impacts of data centres. They are important, and, of course, it is important that we make sure that the NSIP regime does not diminish them, as in comparison with the TCPA regime. Both planning regimes are governed by the same underlying principles to ensure that environmental effects from the proposals that come forward are identified and considered clearly as part of the application and decision-making process. The underlying legal and policy frameworks are different. For NSIPs, where a national policy statement has effect, the first port of call for decisions is in the context of the relevant national policy statement. Under the TCPA regime, local authorities decide planning applications in accordance with the local development plan, as we all know. That is the substantive difference between the two, but it should not undermine the environmental aspects being taken into consideration.

The extent to which a proposed data centre NSIP would have environmental impacts, both positive and negative—including water and energy consumption, noise pollution, waste generation, land use, visual impacts and location—would be part of the consideration of the NSIP during its examination and its determination by the Secretary of State. Prescribed statutory bodies, such as the Environment Agency, Natural England, the Forestry Commission and the Canal & River Trust, play an important role in that examination. They must be notified of accepted applications and invited to a preliminary meeting, and they are entitled to make oral representations at hearings.

Environmental impacts are considered as part of the development consent order process, and the 2017 environmental impact assessment regulations set out the procedures for determining whether a proposed development requires the applicant to undertake an environmental impact assessment. Many large business or commercial projects, which will now include data centres, can be caught by the EIA regulations. An EIA is a process where the likely significant environmental effects are assessed and taken into account, and, where applicable, an applicant must submit an environmental statement as part of their application to the Planning Inspectorate.

The emerging national policy statement on data centres, like any national policy statement that is being developed, will need to be supported by an appraisal of sustainability which takes account of the environmental, social and economic effects of designating an NPS and reasonable alternatives, sets out mitigation and enhancement measures and helps inform the preparation of the national policy statement to promote sustainable development. Habitats regulations also apply to an NPS on habitats sites.

I have gone into that in some detail because I want noble Lords to understand that there is significant environmental protection, regardless of which route through planning data centres take.

The noble Baroness, Lady Pinnock, mentioned heat. Data centres produce significant heat; the technology exists to capture that and use it in district heating networks or to meet significant demand. I hope that, increasingly, as this industry develops, there will be more creative and imaginative uses for that heat. There is potential for it to be captured and used for further benefit and there have been successful examples of using data centre heat for hospitals and homes. A current UK example, if she is interested, is the use of a data centre to heat a local swimming pool in Devon. That is very good news. The Greater London Authority is developing a pilot to test heating up to 10,000 homes and at least one hospital—Middlesex—from London-based data centres. We are engaging with developers and operators to determine whether further interventions are necessary and appropriate to encourage that sort of take-up of recycling the heat.

[Baroness Pinnock (LD)]

I am sorry to interrupt. Capturing the so-called waste heat from data centres and using it for the benefit of businesses or households nearby is important, both environmentally and in helping local communities to find acceptance for a great big building in their midst.

I should like the Minister to say that there will be a requirement to use the technology to capture the heat that is wasted and to use it appropriately to provide for hospitals, or whatever, and households as well. That is what I should like to hear because there has to be a bit of payback for these great big data centres being built across the country, and that is one of them. I have not heard the word “requirement” yet and I should like to.