The UK needs a strategy to meet growing demand for data centres or risk losing its advantage in the race to develop artificial intelligence (AI), one of the sector’s largest players has told Sky News.
Data centres – warehouses housing processors that power cloud computing – are central to the digital economy. They provide the power, connections and security required for the vast amount of processing power on which everything from personal device browsing to AI learning relies.
The UK is currently Europe’s largest data hub, with more than 500 data centres, the majority in the South East.
Slough in west London is the industry’s historic base, largely because of its proximity to both transatlantic connectors and the City of London, whose financial services and banks were initially the biggest customers for computation power.
Last month the government classified data centres as ‘critical national infrastructure’, putting them on a par with power stations and railways but the industry says a broader strategy is required as it moves to meet the growing demand driven by power-hungry AI chips.
High land prices, competition for grid connections and the resistance of local residents have put a premium on further expansion in the southeast, leading some companies to look beyond the industry’s traditional base.
Kao Data, which has an expanding campus in Harlow, Essex, is among those looking to beyond the South East, and broke ground this week on a £350m development at Stockport in Greater Manchester.
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Spencer Lamb, Kao’s chief commercial officer, said the UK industry is at a turning point.
“We are under pressure to be able to provide capacity and create data centre buildings to fuel the demand from AI, that’s the challenge. Whether we as a country provide the environment for it is the big question mark,” he said.
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“If we want to be part of the global AI opportunity we need to deploy these resources in locations that are suitable, sustainable and have the opportunity for growth. We didn’t really have a plan 10 years ago when cloud computing started, and by accident we’ve ended up where we are today which is in effect consuming all the power into the west of London.
“Now is the time to come up with a UK-wide data centre strategy and start deploying these facilities in other parts of the country, distributing them fairly.”
Kao’s expansion in Manchester exploits an existing industrial site – it will replace a concrete factory – and the availability of a grid connection, fundamental in a notoriously power-hungry industry in which a facility’s size is measured in megawatts not square feet. A 100MW data centre consumes the same amount of electricity as 100,000 homes, a town roughly the size of Ipswich.
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Mr Lamb said it is a model the government should heed. “A realistic opportunity would be to allocate two or three locations across the UK which have access to power as data centre planning zones, where the local authorities understand what a data centre is, are welcoming and we can develop these buildings simply and swiftly and remove a lot of the bureaucracy that exists.”
The Stockport site also has the backing of the mayor of Greater Manchester, Andy Burnham, who sees data as part of the jigsaw of infrastructure required to boost economic development in the North West.
“This is now critical national infrastructure as designated by the new government, and it makes sense that all of that capacity is not just clustered in one part of the country. We now need to see the emergence of a large-scale data centre industry in the north of England,” Mr Lamb said.
The challenge of further expansion in the South East is evident on the outskirts of the expanding village of Abbotts Langley in Hertfordshire, where a patch of green belt has become a frontline in the debate over data centres and the new government’s commitment to growth.
The 31-hectare plot, once grazed by cows that produced milk for the nearby Ovaltine factory, has been bought by property developer Greystoke Land and earmarked for a data centre.
The local planning authority, Three Rivers Council, rejected it because of the loss of green belt, but on her first day in office, Angela Rayner, the housing minister, “called in” the application, beginning a process expected to end with her over-ruling the local authority.
Labour promised to back development in government but that does not make it popular. As well as concerns over the environmental impact of a data centre, residents believe the development will remove the only buffer between the village and the motorway.
Stephen Giles-Medhurst, Liberal Democrat leader of Three Rivers Council, 76% of which is made up of green belt, told Sky News communities need something in return.
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“I’m not a total nimby, I can see which way the wind is blowing, but we will make the best case possible to say no to this development because it is an inappropriate site, which causes very high harm to the green belt.
“Ironically we do have some brownfield sites that landowners won’t release, and we can’t compulsory purchase, let’s do something about that and bring them back into public ownership.
“But if at the end of the day we’re overruled then we will be demanding the infrastructure that’s for Abbots Langley and Three Rivers.”
A Ministry for Housing, Communities and Local Government spokesperson said: “Our reforms to the planning system will make it easier to build the key infrastructure this country needs – such as data centres – securing our economic future and giving businesses the confidence to invest.
“Development on the green belt will only be allowed where there is a real need and will not come at the expense of the environment.”
Nine water companies have been blocked from using customer money to fund “undeserved” bonuses by the industry’s regulator.
Ofwat said it had stepped in to use its new powers over water firms that cannot show that bonuses are sufficiently linked to performance.
The blocked payouts amount to 73% of the total executive awards proposed across the industry.
The regulator has prevented crisis-hit Thames Water, Yorkshire Water, and Dwr Cymru Welsh Water from paying £1.5m in bonuses from cash generated from customer bills.
It said a further six firms have voluntarily decided not to push the cost of executive bonuses worth a combined £5.2m on to customers.
Instead, shareholders at Anglian Water, Severn Trent, South West, Southern Water, United Utilities and Wessex will pay the cost.
David Black, chief executive of Ofwat, said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability.
“While we are starting to see companies take some positive steps, they need to do more to rebuild public trust.”
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The announcement came in an Ofwat update on firms’ financial resilience and bonuses.
Industry lobby group Water UK said: “Almost all water company bonuses are already paid by shareholders, not customers.
“All companies recognise the need to do more to deliver on their plans to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers.
“We now need the regulator Ofwat to fully approve water companies’ £108bn investment plans so that we can get on with it.
“Ofwat’s financial resilience report provides yet more evidence that the current system isn’t working, with returns down to 2% and eight companies making a loss.
“It is clear we need a faster and simpler system which allows companies to deliver for customers, the environment and the country.”
Court papers filed on Wednesday expand on an earlier outline for what prosecutors argued would dilute that monopoly.
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Google called the proposals radical at the time, saying they would harm US consumers and businesses and shake American competitiveness in AI.
The company has said it will appeal.
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The US Department of Justice (DoJ) and a coalition of states want US District Judge Amit Mehta to end exclusive agreements in which Google pays billions of dollars annually to Apple and other device vendors to be the default search engine on their tablets and smartphones.
Google will have a chance to present its own proposals in December.
A trial on the proposals has been set for April, however President-elect Donald Trump and the DoJ’s next antitrust head could step in.
Dozens of partners at PricewaterhouseCoopers (PwC), Britain’s biggest accountancy firm, will next month take early retirement as its new boss takes steps to boost its performance.
Sky News has learnt that PwC’s 1,030 UK partners were notified earlier this week that a larger-than-usual round of partner retirements would take place at the end of the year.
Sources said the round would involve several dozen partners – who command average pay packages of about £1m – leaving the firm.
PwC named about 60 new partners earlier this year under Marco Amitrano, who was appointed as its new UK boss in the spring.
Mr Amitrano is understood to have informed partners about the changes in a voice memo, although one insider disputed the idea that the numbers involved were “significant”.
The partner retirements come as the big four audit firms contend with a sizeable bill from increases in the Budget in employers’ national insurance contributions.
It emerged this week that Deloitte is cutting nearly 200 jobs in its advisory business, according to the Financial Times.
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An ongoing shake-up of the audit profession is not being restricted to the big four firms, with Sky News revealing on Wednesday that Cinven, the private equity firm, was in advanced talks to buy a controlling stake in Grant Thornton UK.
The deal, which is expected to value Grant Thornton at somewhere in the region of £1.5bn, was announced on Thursday morning.