Making data centres work for the places that host them

I hadn’t expected data centres to become a talking point in the US midterms. Yet concerns about electricity bills and the demands of these facilities have brought them into the political debate. For those of us working in economic development, the question is familiar. When major investment arrives, who benefits?

Having assessed several data centre proposals at AMION, I keep coming back to the gap between the national growth story and the experience of the places hosting it. The UK needs digital infrastructure. Communities also need a convincing account of what a development will mean for their jobs, businesses and resources. Closing that gap should be central to how we assess and shape data centre proposals.

The national ambition is clear. Data centres were designated critical national infrastructure in September 2024, and the UK Compute Roadmap forecasts a need for at least six gigawatts of capacity capable of supporting AI by 2030. AI Growth Zones offer a route to spreading investment more widely. But those national benefits, including digital resilience and competitiveness, will not necessarily accrue to the places hosting the facilities. The challenge, then, is how to turn such significant investment into lasting opportunities locally.

What the jobs figures tell us

The data centre sector is already substantial and is expected to grow. A 2024 report by techUK and Henham Strategy estimated an annual contribution of £4.7 billion in gross value added (GVA) – a measure of economic output – and support for 43,500 jobs across the UK economy. Those estimates include supply-chain and employee-spending effects. They are not a count of people working inside data centres.

That distinction matters when assessing an individual proposal. Construction and fit-out can generate substantial work, but those jobs are temporary. Once operational, a data centre can produce considerable economic output with a comparatively small workforce. A strong GVA figure therefore tells us only part of the story about the incomes and opportunities available to local households.

One AMION assessment illustrated this distinction. A data centre proposal offered higher average pay and a greater proportion of professional occupations than alternative employment uses. However, its smaller workforce meant fewer professional jobs overall. The higher pay percentage was attractive, but the absolute number changed the picture.

That did not make the data centre the wrong choice. It showed why an assessment needs to consider the number, quality and accessibility of jobs together, alongside the wider value of the infrastructure. Where land and grid capacity are constrained, realistic alternatives also matter – how many jobs and of what quality might a viable alternative use support?

How more of the benefit stays local

National economic benefits cannot simply be allocated to the locality around a site. Workers may commute in, specialist equipment may come from elsewhere and profits may flow to owners outside the area. The local case needs to explain which benefits residents and businesses can realistically access. It should also distinguish gross activity from genuinely additional local benefits, allowing for what might otherwise have happened and for activity displaced from elsewhere.

This is where economic development practitioners can make a practical difference. Recruitment plans should connect the jobs being created with local skills and training provision. Procurement plans should identify contracts that local firms could compete for, with enough notice and support to help them do so. These conversations need to start while the project is being designed, rather than after the main contracts have been awarded. Commitments should be specific enough to monitor, rather than resting on assumptions about local take-up. There may also be opportunities to build links with universities and businesses using AI.

But a data centre does not create an innovation cluster simply by opening its doors. The case becomes more convincing when it names the partners, explains what they will do together and shows how local firms will gain access to expertise or computing resources.

Taking resource pressures seriously

These opportunities need to be considered alongside demands on electricity, water and land. Communities are entitled to ask how those demands will be managed, who will pay for the infrastructure and whether other developments could be affected. In areas with limited grid capacity, the question includes what other viable investment might be delayed or constrained.

Data centres have a complex relationship with climate change and the transition to net zero. The International Energy Agency identifies both rising emissions from data centre electricity use and potential emissions savings from AI applications elsewhere. Those wider savings depend on how the technology is adopted and should not be assumed to offset a particular site’s impacts.

For a local proposal, economic opportunities and environmental demands deserve scrutiny, with clear assumptions about what a development is expected to deliver and how its performance will be measured.

Making commitments count

The government’s new Data Centre Covenant gives this debate a practical focus. It links additional government action for strategic data centres to tests covering energy costs, environmental performance, employment and community benefits. It also calls for Local Benefit Plans developed with communities, with investment beyond existing planning obligations. Further details on which projects qualify, and the additional criteria are still to follow. For relevant projects, local partners should seek clear, funded commitments on skills, procurement and community outcomes, with responsibilities and measures of success agreed early.

I welcome the opportunity this creates, but its value will depend on whether broad commitments become specific, funded actions. Communities should be able to see who is responsible, when delivery is expected, and what happens if commitments are missed.

The US debate is a timely reminder of why this matters. Few residents worried about their electricity bill will be reassured that, at least, the servers are getting faster. Confidence in these developments will depend on benefits people can recognise and commitments they can trust.

For me, the task for economic development is to help make those benefits happen. That means testing claims against realistic alternatives, shaping proposals early, agreeing funded local commitments, and following through on delivery. The national case for data centres can be strong. The places hosting them deserve an equally clear account of what they stand to gain.

Charlie Bircham MRICS is a senior consultant at AMION Consulting and iED member. He has worked on several data centre schemes across the country.

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