AI companies are using Brexit ‘freeports’ to leech UK water supplies

This article is part of a series looking at the risks to the UK’s water security which are being amplified by our current Labour government. You can read the AI data centres Water Crisis series here.

According to a recent report from a government advisory group, AI data centres and companies are taking advantage of lax regulations to leech unsustainable volumes of British water. We don’t know how unsustainable this state of affairs is, because companies don’t have to measure or report their usage. In fact, we only know how bad things are getting because journalists have shown these companies are already guzzling millions of litres a year.

This will probably come as no surprise to you, but the reason our regulations are so lax is because of the post-Brexit free-for-all which was implemented by the Tories and expanded by Labour.

And things may only get worse from here.

Transparency over AI data centres

The Government Digital Sustainability Alliance (GDSA) was established to provide guidance on how we can achieve “digital transformation” without putting sustainability targets at risk. In aid of this, they published a report titled Water use in AI and Data Centres.

Following decades of failed privatisation schemes, water availability is a growing problem in the UK. The GDSA notes that the UK was already on track for “a projected daily water deficit of nearly 5 billion litres by 2050”. This figure does not “adequately account” for AI infrastructure or data centres, because the owners aren’t compelled to report on water usage.

In other words, we have no idea how bad the problem is now or how bad it will get.

In the GDSA report, the advisory group notes:

The [Environment Agency] has urged data centres to forecast and plan their water consumption, and to explore their own sources, such as water reuse, due to the current insufficiency of data for comprehensive future planning. This reliance on industry self reporting, however, is challenged by a pervasive lack of transparency.

There is currently “no reliable data on the quantity of resources used by data centres”, and only two fifths of data centre operators actively track their water usage metrics.

The report adds:

This fundamental transparency deficit is a major barrier to effective governance and accountability, making it impossible to accurately measure, manage, or regulate AI’s water impact. Without comprehensive and reliable data, the problem cannot be accurately quantified or effectively addressed through policy.

The GDSA report highlights that the EU has “implemented mandatory disclosure of water consumption for data centre operators under its Common Union Rating Scheme”. This “demonstrates that mandatory, location-based reporting is feasible and necessary to ensure accountability and inform policy”.

Feasible or not, it seems like the absence of “accountability” isn’t a bug; it’s a feature.

‘AI Growth Zones’

Last year, David ‘European’ Powell published an article for the Canary in which he looked at the “post-Brexit corporate takeover of the UK via SEZs, Freeports, and AI Growth Zones“.

My latest article for @TheCanaryUK

The Corporate Coup: How Britain’s Free Zones Are Dismantling Democratic Governance
A Canary Investigation into the UK’s Post-Brexit Zone Proliferationhttps://t.co/OcL22wLyPY

— EuropeanPowell (@EuropeanPowell) October 14, 2025

In that article, he described AI Growth Zones as “one of the newest categories in Britain’s bewildering taxonomy of special economic zones”. Launched by Starmer in 2025, these zones receive several benefits, including an ability to function as “regulatory sandboxes” where “regulatory experimentation” can take place. Powell describes this as “a euphemism for suspending normal rules”.

The ability to ‘experiment’ is obviously a big positive for companies who know they need more water and energy than common sense would allow.

As of right now, AI Growth Zone applications ‘remain open indefinitely’. This means that in addition to not understanding what sort of strain AI infrastructure will have, the government hasn’t even limited early applicants to avoid unforeseen complications.

It really is difficult to express how reckless this all is.

Critical National Infrastructure and “policy incoherence”

It’s not just the AI Growth Zone rules which data centres are benefitting from. As of September 2024, the government has designated data centres as Critical National Infrastructure (CNI) alongside:

• Chemicals.
• Civil Nuclear.
• Communications.
• Defence.
• Emergency Services.
• Energy.
• Finance.
• Food.
• Government.
• Health.
• Space.
• Transport.
• Water.

AI infrastructure and data centres are now “a sub-sector of Communications, alongside Telecommunications and Internet, Post and Broadcast”.

The GDSA report states that the designation is designed to:

boost business confidence, attract substantial investment and ensure greater government support for recovery from critical incidents. A perceived implication of this status is fewer planning restrictions for data centre developments

It goes further than just loose regulation, however, as it also allows the AI barons to bully other providers – even if those providers are CNIs themselves:

Previously, water companies like Thames Water had no legal obligation to service businesses and could, in principle, restrict water supply during periods of scarcity. Thames Water, for example, had warned data centres of potential restrictions during heatwaves and even objected to planning applications for new data centres due to water concerns.

However, the CNI status now effectively overrides these previous stances, meaning data centres will likely face fewer restrictions on water access, even
in water-stressed areas.

The GDSA describe this situation as one of “policy tension” and “policy incoherence”, with the losers being those who live in ‘water stressed regions’.

And shockingly, the government has continued to greenlight AI data centres in the regions which suffer the most acute water scarcity.

The GDSA argues that the CNI designation means the government is more obligated to ensure a “sustainable” supply of water. Currently there seems to be no clear plan to even understand how water sustainability could be achieved, though, never mind to ensure it.

It may not end with the CNI designation either. If a new proposal goes through, data centres will be considered Nationally Significant Infrastructure Projects (NSIP), allowing developers to seek planning permission directly from the government. As we already know the government is favouring US data companies over local British citizens, this is a worrying development.

“Vassalism” over AI data centres

The AI data centres industry has become central to the US economy. In fact, if not for AI, the US GDP would only have grown by 0.1% in the first half of 2025. Shaping our policies around US interests is the direction of travel for British governance, with Powell noting that Freeports and AI Growth Zones are seemingly designed to transfer UK wealth to US interests:

Much of the “investment” flowing into UK zones comes from US financial entities. The governance frameworks being constructed grant these entities extraordinary powers over British economic life, in my book this is blatant vassalism.

We are witnessing the transfer of British sovereignty to foreign powers dressed up as economic policy. Post-Brexit Britain hasn’t reclaimed economic autonomy, it’s created the legal architecture for unprecedented foreign corporate control over domestic governance. The zone system enables US financial capital to operate with fewer constraints than it would face in the United States itself, while accessing UK public subsidy and infrastructure support.

The Americans aren’t simply eating our lunch; they’re also guzzling our water.

It’s just a shame we can’t drink all that red tape we cut, isn’t it?

Featured image via the Canary