Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain is going to experience a data centre bonanza over the next decade — at least, that is the hope of the new Labour government. Prime Minister Sir Keir Starmer is determined to “make the UK irresistible to AI firms looking to start, scale, or grow their business”, and that means clearing away planning obstacles for private-sector investment in the physical infrastructure on which artificial intelligence depends. But something has been tripping me up in the recent flurry of announcements about data centre projects: the sheer number of new jobs that appear to be involved. “Over 4,000 jobs will be created” by a £10bn investment by Blackstone in a data centre campus in Northumberland, the government has announced. A separate £14bn-worth of investment in AI infrastructure by three tech companies will “deliver 13,250 jobs across the UK”, Starmer has said. Hang on. Data centres are stuffed with machines, not humans. Microsoft, for example, says its data centre buildings employ about 50 people each. So where are these big job forecasts coming from?Let’s take the Northumberland project, which envisages 10 data centres built on land that had been slated for the (failed) Britishvolt battery plant. According to the planning documents, the development “is estimated to require up to 40 people per data centre”. Once all 10 centres are built (expected by 2035) that makes 400 jobs, a tenth of the number the government cited.The planning documents say “peak monthly construction employment could be in the region of 1,200 jobs” — these aren’t permanent roles but there is likely to be a decade’s worth of construction work on the site, so they aren’t fleeting jobs either. Even so, the operational and construction jobs combined only account for 1,600 jobs. Where are the rest?Now we enter the murkier realm of economists’ models. It is common practice to estimate the number of “indirect” and “induced” jobs created by a big investment. These are the jobs that will be created in the supply chain and as a result of the new employees spending their money in local pubs, shops and so on. The planning documents for the Northumberland project say that one direct job in a data centre can support between five and seven additional jobs in the local economy and related industries, which “could equate to an additional 2,000 to 2,800 jobs in the local economy once all ten data centre buildings are operational”. Take 2,400 as the midpoint and we have reached the government’s 4,000 number.It is reasonable to assume there will be some spillover jobs, but the “multipliers” applied are often derived from models and can vary a lot by sector and country. Blackstone told me the multiplier cited in the planning documents was drawn from PwC research into the impact of data centres in the US, which was commissioned by the Data Center Coalition, the membership association for the industry.Henry Overman, a professor of economic geography at the London School of Economics, told me that academics tend to find smaller multipliers when they do after-the-fact empirical studies of what happened when new jobs arrived in an area. His study into the impact of the BBC’s decision to move 1,700 medium and high-skilled jobs to Salford in Greater Manchester between 2011 and 2012, for example, found that each BBC job created on average 0.33 additional jobs in the creative industries, rising to 0.55 additional jobs by 2017. He and his colleagues found no significant effect on total employment.None of this is to say the project isn’t positive for Northumberland. But for the government, why invite public disappointment or cynicism by bundling all these estimates into one big number, when you could treat people with respect and give them all the details from the start? An alternative could sound something like: “This project will create a moderate number of skilled jobs and a decade’s worth of construction work. It will probably have wider local benefits too, but it’s hard to put a precise number on it.” Admittedly, that might not be eye-catching and boosterish, but my sense is that people are in no mood for eye-catching boosterism these days anyway.There are plenty of good arguments for the economic importance of data centres (as well as some concerns about energy and water use), but “they create tonnes of local jobs” isn’t one of them. If Starmer wants to revive productivity growth as much as he says he does, he will have to get comfortable talking about the expansion of industries that produce a lot of value without needing many employees. For these new types of sectors, which are capital-intensive but not labour-intensive, the Labour government needs to update its script.sarah.oconnor@ft.com
