Executive Summary

• Keir Starmer’s resignation means there will be a shift in the UK’s ambitions of becoming Europe’s AI growth hub; his market-led pro-innovation AI stance clashes with front-runner Burnham’s interventionalist philosophy.
• Now, with a potential leadership contest through July and August, the industry faces regulation gridlock which could become another bottleneck for operators.
• If Burnham becomes the new resident of No. 10 and applies his “Manchesterism” framework to the UK, this could mean operators must throw away abstract corporate metrics and prove that their infrastructure provides explicit socio-economic benefits, job creation and public value, which might be exactly what the industry needs to finally heal the disconnect with the communities that host it.

Today, Keir Starmer announced his resignation after just less than two years in office. The UK has had seven Prime Ministers in a decade, and Starmer’s exit at this crucial time in the tech and data centre industry. The political landscape is shifting as the data centre industry collectively settles into the still-new critical national infrastructure title, which will undoubtedly cause uncertainty and friction in the UK’s ambitions of being an AI growth hub.

The UK were positioning itself as an international AI growth hub, especially under Technology Secretary Peter Kyle and Starmer’s legislation to enable the UK to compete with the US market. With the “King of the North”, Andy Burnham, rumoured to be “coronated” into the leadership position, or even a leadership election with him as the frontrunner to succeed Starmer, the tech sector is about to face legislative gridlock and a shift in AI and infrastructure regulations.

Policy and planning gridlock

The potential of a leadership contest running through July and August means vital policy shifts will be delayed, effective immediately, which will inevitably cause infrastructure project delays and standstills.

With data centres barely settling into their new CNI status, there still needs to be new statutory cybersecurity duties and protections; no one knows what the regulatory landscape will look like this year, which casts doubt and uncertainty towards the UK market.

The upcoming Cyber Resilience Bill, for example, now faces delays which could cause a ripple effect in the industry and this kind of uncertainty isn’t a good look for investors.

Time of political instability gives an undesirable “uncertainty premium” for global infrastructure funds that are looking to deploy capital in the UK. The Financial Times reports that a leadership contest could “reignite fiscal risks“, which could become a precarious situation for the UK.

Market forces vs public control

Starmer’s market-led pro-innovation AI stance clashes with Burnham’s interventionalist philosophy. Burnham believes the government should be playing an active, heavy role in tech and industrial growth to keep economic benefits distributed fairly. The Guardian reported on what Burnham’s Manchesterism vision entails, which includes reversing 40 years of privatisation and a long-term plan to take large parts of Britain’s water and energy usage into public control; in fact, his allies want to potentially include the National Grid as part of that too. Can you begin to imagine how this could affect the data centre industry? For good or for bad. In a response to the industry’s alarm at this ambitious plan, Burnham’s The Productive State report argues, “rebuilding Britain’s systems of public provision is not the alternative to fiscal prudence. It is fiscal prudence.” This report was published following his warning that we “can’t just leave (AI) to the market” as he advocates for public control and government intervention to ensure communities aren’t left behind. He has a point.

What could this mean for the industry?

Everyone will be asking this and coming up with their own theories for months to come, but if Burnham becomes the new resident of No. 10 and applies his “Manchesterism” framework to the entirety of the UK, there will be a huge shift where data centre operators must prove that their projects benefit communities. Forcing operators to move past abstract corporate metrics and declare explicit socio-economic benefits, job creation and public value, might be exactly what the industry needs to finally heal the disconnect with the communities that host it.