The UK Government has unveiled a new Data Centre Covenant and a package of measures intended to fast-track domestic data centre capacity as part the Autumn Budget 2026 announcements.
Budget documents state the covenant will boost national artificial intelligence (AI) capability and strengthen national cyber and biosecurity, which ministers believe will improve protection for infrastructure and support economic growth.
In his budget speech yesterday, 28 October, chancellor of the exchequer John Healey set out a series of interventions that link public support for certain large data centre projects with obligations to local communities.
The covenant establishes tests strategic data centres must meet to access enhanced government support.
Central to this plan is the requirement data centre developers “invest in improving local communities”, Budget documents state.
Operators applying for the government’s backing will need to produce a Local Benefit Plan, drawn up with local stakeholders and scaled to the size of the development.
The funds can be spent on local priorities such as transport, parks and town centre improvements.
In return, the government will use new powers under the Planning and Infrastructure Act to accelerate access to electricity for data centres.
Measures include reserving and reallocating grid capacity for strategically important projects and identifying early pockets of capacity with network operators and the National Energy System Operator (NESO).
Further measures will include facilitating transfer of pre‑2030 connection contracts, and, in what is described as narrowly defined and tightly controlled circumstances, permitting temporary on‑site electricity generation until permanent grid connections are available.
Budget documents said the covenant will be supplemented by a draft Data Centre National Policy Statement, to be published for consultation, setting out how large projects will be decided under the Nationally Significant Infrastructure Project regime.
The government also said further details on exactly which sites will be classified as “strategic” and the full criteria they must meet will be published in due course.
The budget also allocates significant new funding across AI and security priorities. Announced sums include:
- £120M additional funding for the AI Security Institute and £140M more for the Sovereign AI Unit intended to help UK AI firms scale
- £165M for a new National AI Biosecurity Initiative
- £154M for cyber‑defence strengthening
- £40M to create a National Agentic Security Unit to respond to “rogue agentic incidents”
Overall, the government said it has committed more than £700M in this package to “strengthen security, resilience and sovereign capability” and to accelerate AI adoption across business and public services.
The measures are being presented as part of a drive to reduce reliance on overseas infrastructure and to secure the compute, energy connections and advanced chip design needed for an independent AI ecosystem.
The Ministry of Defence (MoD) is assessing options to increase sovereign compute and data centre capacity on its secure estate.
It has said a facility co‑located with existing defence innovation and testing infrastructure could be developed and might ultimately offer secure compute access to UK small and medium‑sized enterprises, supporting a domestic “Sovereign AI industrial base”.
As part of publishing the Data Centre Covenant, the government has planned a consultation on the National Policy Statement.
This will follow up the announcements with definitions of “strategic data centres” and the final criteria for enhanced support.
