The Competition and Markets Authority (CMA) has announced the launch of a new market study focusing on the design, planning, and delivery of road and railway infrastructure across the UK. This significant review comes at a pivotal time for the sector, as the government continues to shape its long-term infrastructure strategy and implement legislative reforms.
This marks the first market study initiated by the CMA since the publication of the government’s strategic steer for the authority. It will be conducted in line with the CMA’s ‘4Ps’ commitment: emphasising pace, predictability, proportionality, and enhanced process to ensure more effective engagement with key stakeholders.
The primary objective of the market study is to identify opportunities to improve collaboration between the public sector and industry. This includes examining potential enhancements to public procurement practices, with the overarching goal of facilitating the construction of more cost-effective infrastructure in support of the government’s growth mission. The study is anticipated to result in recommendations to the government, though it does not grant the CMA direct power to intervene in the market.
The civil engineering sector contributed a substantial £23 billion to the UK economy in 2023. This study has the potential to boost productivity, streamline procurement processes, and reduce barriers to entry across the sector. Furthermore, it could create a significant multiplier effect on broader economic growth by improving access to jobs and reducing the costs of moving goods.
The National Infrastructure Commission has previously estimated that public and private sector investment in infrastructure will need to increase by 30% – 50% over the next decade to deliver increasingly complex projects. However, the Commission also highlighted that the sector is not currently operating optimally, suggesting that system-wide improvements could lead to savings of 10% – 25% across infrastructure projects.
Road and railway projects account for approximately 70% to 75% of government spending on economic infrastructure, which encompasses services crucial for economic function such as highways and power lines. Building on evidence gathered to date, the review will specifically focus on:
- Ensuring public authorities access and examine the right information to make well-reasoned decisions when procuring roads and railways. It will also assess their ability to work effectively with the market to deliver projects on time, to a high quality, and within anticipated budgets.
- Assessing if any procurement, planning, or other regulatory processes create significant unnecessary barriers that limit companies’ ability and incentive to enter, expand, invest, and innovate in this market.
- Examining any necessary changes to the way this ecosystem operates to best incentivise and support civil engineering firms in delivering public roads and railways in a manner that optimally boosts UK productivity and growth.
The CMA is well-positioned to undertake this comprehensive review across the UK, taking into account diverse national and regional perspectives. Its aim is to form a holistic and impartial view of market operations and to make clear, focused recommendations to drive improvements. This approach leverages the CMA’s rigorous, evidence-based processes, its commitment to collaboration with all market participants, and its expertise in developing positive steps to enhance competition and markets.
Sarah Cardell, Chief Executive at the Competition and Markets Authority, stated: “There’s no question that reliable, high-quality infrastructure is critical in accelerating economic growth. To achieve this, public authorities and the civil engineering sector must be able to work together to deliver projects on time, within budget and to high standards. This review is a crucial step in identifying barriers holding back the sector – supporting the drive to get Britain building and ensuring every penny spent is delivering value for taxpayers.”
The CMA is actively seeking input from businesses involved in designing infrastructure projects or operating across the supply chain. The study will adhere to the CMA’s ‘4Ps’ commitments, which include:
- Setting out its intention to complete this work in 10 months, well within the 12-month statutory timetable.
- Publishing a roadmap to provide clarity for businesses on each stage of the study and how they can engage with the CMA.
- Explaining its focus areas and expected outcomes, with regular updates provided to participants as the study progresses.
- Running a range of engagement channels to gather insights from the full spectrum of businesses within the civil engineering supply chain, as well as public sector clients.
Darren Jones, Chief Secretary to the Treasury, said: “Upgrading the country’s economic infrastructure is essential for unlocking growth across the country and delivering our Plan for Change. This study will build on our 10-year infrastructure strategy and help us deliver growth with its evidence-based, independent findings.”
The market study will encompass the full lifecycle of roads and railways, including their enhancement and maintenance. It will not consider privately procured roads or smaller maintenance activities such as potholes. Notably, the study explicitly excludes HS2, given its recent extensive independent reviews.
Alasdair Reisner, Chief Executive at the Civil Engineering Contractors Association, welcomed the announcement: “Civil engineering plays a vital role in all our lives, from the largest megaprojects to the smallest local schemes. But in all cases, we must strive to work with our clients to deliver outstanding and affordable results. We welcome the CMA’s focus on how more productive delivery of civil engineering can secure better outcomes and help the government meet its ambitions for growth. We look forward to working to support this study.”
Following its comprehensive analysis, the CMA will consider potential options for improving market operations and expects to publish an interim report outlining its initial findings in November.
