On the day of Budget 2026, the UK chancellor has announced a new deal for data centres; a ‘covenant’. On the same day, the UK announced the draft National Policy Statement on data centres. This happens nearly a week after hyperscalers Nvidia and Microsoft warn AI Ministers that data centres have to clean up their image to avoid rising resistance and the techlash.
The UK government's Covenant confuses more infrastructure with more sovereignty. The problem is not a shortage of data centres, but the concentration of power across the AI stack. Amazon, Microsoft and Google already dominate cloud infrastructure and are rapidly extending that dominance into AI. Without adequate assessment and safeguards on ownership, control and competition, accelerating data-centre development risks deepening dependence on the monopolies that already have entrenched dominance.
The Covenant repeatedly cites sovereignty, but sovereignty means freedom from dependency and concentrated power. The hyperscalers who are set to benefit are US corporations accountable to shareholders rather than the communities where they operate and subject to political and regulatory pressures beyond UK control.
The strategy also rests on a largely untested assumption: that AI investment, technological leadership and preferential treatment for hyperscalers will automatically generate broad-based economic growth. The case has not been made. Too little attention has been paid to who captures the gains, the opportunity costs involved, or the social and environmental impacts borne by local communities. “Strategic data centres should pay their fair share” adds an ethical veneer to the proposal, but rhetoric is no substitute for meaningful governance. Local benefit for communities must include the right to scrutinise proposals and object before accelerated treatment is granted.
This is particularly concerning given the scale of public support on offer, including planning acceleration, favourable electricity prices and accelerated access to the grid.
Data centres, compute capacity and energy access are becoming critical bottlenecks in the AI economy. The ownership structures established today determines who controls future innovation, digital services and economic rents. The risks that lie in existing concentration are exacerbated by creating conditions for even greater concentration in the future.
Until these issues are addressed, there should be a moratorium on strategic support, accelerated treatment for new data-centre developments.
Any public support should be conditional on:
Full ownership transparency.
Concentration and dependency assessments.
Strong obligations on dominant firms, including interoperability and non-discriminatory access.
Clear public-benefit tests linked to diversification and public value.
Procurement rules that reduce dependency through open standards, portability and credible exit strategies.
Without demonstrably satisfying these conditions, and addressing ownership and control, the UK risks creating a new generation of digital landlords under the banner of “sovereignty”.