All we want for Christmas is a Scottish data centre strategy

There weren’t many early Christmas presents in Chancellor John Healey’s lacklustre budget on Wednesday, not even the £100 energy bill support for approximately 20 million home in council tax bands A-D homes when the cost is set to rise by £400 in January. What’s £2.6 billion when it comes to political gestures?

The SNP certainly feels hard done by, with the block grant going up by less than inflation and allowing Deputy First Minster and Finance Secretary Jenny Gilruth to claim the resource budget will fall by the equivalent of £550 million, and the capital budget by £100 million. It means the Cabinet Secretary for Public Service Reform Ivan McKee needs to get a move on with his axe wielding if the existing £5 billion funding gap is to be bridged.

For every party except the Greens, there is a consensus that the growing chasm between income and expenditure can only be narrowed through economic growth. But there’s no agreement on how it should be done, hence the continued uncertainty about the future of the Rosebank oilfield west of Shetland which could generate up to £1 billion in annual tax revenue for the next 20 years.

Environmentalists were furious as it emerged from budget background documents that the UK Treasury is already factoring in the receipts, but from outright opposition under previous energy secretary Ed Miliband, reality trumps utopian principle when the Chancellor is feeling down the back of his sofa for small change to meet an £11 billion demand for extra defence spending, while trying to find ways to control the welfare budget without sparking another backbench revolt.

Both John Healey and Jenny Gilruth badly need economic growth and the revenue it generates, and what stood out on Wednesday was the importance the UK Government is placing on grasping what many of those same environmentalists see as the nettle of artificial intelligence and the data storage which powers it.

Senior Scottish council officials, rather than the politicians, are generally positive about the benefits data centres could bring and it’s not difficult to see why. CX Tech Limited, the company behind the Chapelcross project in Dumfriesshire, expects the campus to generate around £8.2 million in annual business rates. The Southside project in the Scottish Borders is projected to produce over £950 million in tax revenues over 15 years, and benefit the wider Borders economy by £47 million. North Lanarkshire Council will spend £74 million on road improvements into Ravenscraig where Apatura say their data centre will support over 2,000 jobs and boost the Scottish economy by £729 million a year.

Such numbers are dismissed as propaganda by keffiyeh-wearing protestors, who see data centres as a perfect storm of Big Tech, American capitalist imperialism, landscape destruction, and the end of work as we know it. It’s Armageddon in an Nvidia chip. That, of course, is not how Mr Healey sees it, or indeed the Scottish minister for public finance Hannah Mary Goodlad who has promised to deliver new guidelines for data centre planning applications by, guess when, Christmas.

Helpfully, the budget package came with a new “Data Centre Covenant” which laid out the UK Government’s expectations for successful planning applications, and as it does not apply in Scotland it sets a bar for Ms Goodlad, and a useful way to understand public sentiment before she produces her own version.

The Covenant expects data centres to lower electricity bills by spreading fixed costs and, presumably, using constrained renewable energy of which Scotland has an abundance. Meaningful community investment, support for training and apprenticeships, sustainable quality jobs, and high environmental standards are all requirements of which serious data centre developers are fully aware, and very little of it gives current applicants much cause for concern. It’s not yet clear how a demand for data centres to “provide secure, resilient UK access to compute for critical services and national priorities” can be guaranteed when the developers are unlikely to be the eventual operators, but it shouldn’t be impossible through contractual conditions.

But most notably there was no mention of community consent, the condition included in a Scottish Labour amendment which was accepted by the SNP when demands for a data centre moratorium were debated in Holyrood in September. Senior Labour insiders insist it will not mean local referendums or hand communities a veto, but increasingly vocal data centre opponents will be disappointed if the guidance only reinforces current requirements for a thorough community consultation.

Privately, senior civil servants only expect about three of the 24 current live Scottish data centre proposals to be built, which would nullify much of the scaremongering about the lights going out. They think several are more about leveraging land value than a commitment to technological advancement and, somewhat refreshingly, it’s understood Ms Goodlad’s instincts are that natural selection by market will do the job, rather than the Scottish Government getting involved in a beauty parade. That someone in the Scottish Government is picking up Kate Forbes’ pro-private enterprise torch is good news for the whole business community, which feared it had lost a champion.

Ms Goodlad’s guidance is unlikely to be lighter touch than the Healey Covenant because there is no need to attract more interest, but it can’t be significantly tougher either, or investors will walk away. She’s not got long to sort it out, but either way, she’ll be falling off someone’s Christmas card list.