North East MSA to set rules for data centre boom
As the region looks to maximise its AI potential, the authority’s cabinet is being asked to approve the development of a North East Data Centre Strategy, alongside plans to use £5m of its own funding to underwrite a central government grant.
The £5m will fund the first phase of the AI Growth Zone’s local benefits programme, with four priority areas identified: AI skills for primary school pupils, helping businesses adopt AI, supporting high-potential digital and AI companies, and promoting and coordinating the region’s AI ecosystem.
The North East was designated an AI Growth Zone in September 2025, with the government saying it could attract up to £30bn of private investment and create more than 5,000 jobs.
The MSA said it wants to move quickly because the government funding has been delayed, and is seeking approval to use Integrated Settlement funding to underwrite the £5m commitment until the central government money is received.
Alongside the funding package, the MSA wants to establish a clear framework for future data centre investment across the North East.
The authority said data centres would create construction jobs during development and generate business rates and employment once operational.
However, the report that will be considered on 22 September, warned that the facilities are energy-intensive and, in some cases, require significant water resources. They can also occupy land that could potentially be used for other industries which may create more employment.
The MSA said it therefore needs to understand the real value of individual data centre investments to the region, particularly where headline investment figures include large amounts spent on AI hardware sourced from outside the UK.
The proposed strategy will establish shared criteria for assessing and endorsing future data centre schemes, while creating a clearer route to accelerate projects considered to offer the greatest benefits.
The authority said it wants to ensure future developments generate wider benefits, including opportunities for North East businesses in the supply chain and access to AI computing power for local companies and residents.
The strategy will be developed alongside the region’s Energy Review, Spatial Development Strategy and work with the seven local authorities in the North East. The Energy Review is due to conclude in February 2027.
The North East MSA’s cabinet is due to consider the proposals on 22 September.
