One of the papers published with the Budget on 28 October 2026 may matter more to commercial lawyers than its length suggests: HM Treasury’s Data Centre Covenant.
The Covenant sets five tests. Data centres should pay their fair share of the energy costs they create, agree a Local Benefit Plan with the host community, adhere to the highest environmental standards, including annual reporting on energy and water use, create local jobs while prioritising UK suppliers, and work with the National Cyber Security Centre. All data centres are encouraged to meet these tests. Strategic data centres must meet them to qualify for additional government support, such as priority access to grid capacity, through a new Ministerial Control Centre.
The Covenant reads as policy rather than statute or contract, its force coming from what is offered in return. The definition of “strategic data centres” is to follow, as is a draft Data Centre National Policy Statement. For operators and investors, the commitments may surface in transaction documents. For landowners and local authorities, the Local Benefit Plan sits on top of Section 106 and the Community Infrastructure Levy, and its legal form has not yet been explained.
The government will also legislate so that non-compete clauses “will no longer be a barrier to hiring for our most promising startups and scaling firms”, and so that workers in the everyday economy are free to change jobs, across the whole economy. The text refers specifically to non-competes in employment contracts. A consultation on the wider use of restrictive practices is promised shortly, and a detailed position is due in early 2027 ahead of legislation. No bill or start date has been given, and the Budget does not say what form the reform will take or whether commercial agreements could be caught.
Elsewhere, mayoral strategic authorities receive a 20% share of locally retained business rates from April 2027, and the government plans to legislate so that strategic authorities can introduce an Overnight Visitor Levy, payable by accommodation providers. From 1 April 2027, Small Business Rates Relief thresholds for qualifying retail, hospitality and leisure properties in England rise to £18,000 for full relief and £21,000 for tapered relief.
The Trading Allowance rises from £1,000 to £3,000 and a new Founders’ Relief for qualifying founders of high-growth, innovative companies offers a 10% Capital Gains Tax rate on up to £10 million of lifetime gains, while the Business Asset Disposal Relief lifetime limit falls to £500,000, all from 6 April 2027. A Young Entrepreneurs Allowance pilot in England and a scale-up programme for women founders are also planned.
For corporate clients, the Budget offers more signals of intent than finished detail, with much of what matters left to consultations and further announcements still to come. Employers reviewing their standard contracts meanwhile may find that the restrictions they rely on most are the ones that will need the clearest justification.
