Market study will assess how the civil engineering sector operates to improve the design, planning and delivery of key infrastructure.
Review will focus on persistent issues around costs and delivery of road and railway infrastructure across the country in support of the government's growth mission and 10-year infrastructure strategy.
CMA will examine opportunities to improve how the public sector and industry work together and expects to make recommendations to government.
Improving how the market operates could enhance productivity, cut costs for businesses and support growth across the wider economy.
The Competition and Markets Authority (CMA) has launched a new market study into the design, planning and delivery of road and railway infrastructure across the country. This is an important time for the sector as the government sets out its long-term plan for the country's infrastructure and undertakes legislative reforms.
This is the first market study the CMA has launched since the publication of the government's strategic steer for the CMA. It will be run in line with the CMA's '4Ps' commitment to pace, predictability, proportionality and enhanced process to deliver more effective engagement with key stakeholders.
The market study will examine whether there are opportunities to improve how the public sector and industry work together, for example through improvements to public procurement, so more cost-effective infrastructure can be built in support of the government's growth mission. The market study is likely to result in recommendations to government and does not give the CMA the power directly to intervene in the market.
The civil engineering sector as a whole added £23 billion to the UK economy in 2023. This study could help boost productivity, streamline procurement and reduce barriers to entry across the sector. It could also create a multiplier effect on growth through wider businesses activity such as improving access to jobs and reducing the costs of moving goods.
The National Infrastructure Commission estimated that public and private sector investment will need to increase by 30% - 50% over the next decade to deliver more complex infrastructure. However, it highlighted that the sector is not currently operating well and making system-wide improvements could result in savings of 10% - 25% across infrastructure projects.
Road and railway projects account for around 70 - 75% of government spending on economic infrastructure, which refers to services built to help the economy work such as highways and power lines. Building on evidence collected so far, the review will focus on:
Ensuring public authorities access and examine the right information to make well-reasoned decisions when procuring roads and railways. It will also consider if they can effectively work 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 which limit companies' ability and incentive to enter, expand, invest and innovate in this market.
Examining any changes needed to the way this ecosystem operates to best incentivise and support civil engineering firms to deliver public roads and railways in a way that best delivers UK productivity and growth.
The CMA is well-placed to look at this market across the UK, including taking account of different national and regional perspectives, to form a holistic and impartial view about how the market operates and to make clear, focused recommendations to drive improvements. This draws on its rigorous, evidence-based processes; collaboration with all players in the market; and expertise on developing positive steps to improve competition and markets.
Sarah Cardell, Chief Executive at the Competition and Markets Authority, said:
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 would like to hear from businesses such as those designing infrastructure projects or working across the supply chain. It will conduct the study in line with the CMA's '4Ps' commitments to pace, predictability, proportionality and process (in particular stakeholder engagement). This includes:
Setting out its intention to finish this work in 10 months, well inside the 12-month statutory timetable.
Publishing a roadmap so it's clear for businesses about what it intends to do at each stage of the study and how they can engage with the CMA.
Explain what issues it intends to focus on and what it expects the likely outcomes of this work to be. This includes updating participants as these develop throughout the study.
Running a range of engagement channels to hear from a full range of businesses through the civil engineering supply chain as well as public sector clients.
Chief Secretary to the Treasury, Darren Jones, 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 focus on the full life cycle of roads and railways, including their enhancement and maintenance. It will not consider privately procured roads or smaller maintenance activities like potholes. It also excludes HS2 given it has undergone multiple reviews.
Alasdair Reisner, Chief Executive at the Civil Engineering Contractors Association, said:
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.
Once the CMA has carried out the necessary analysis, it will consider potential options for improving how the market operates and expects to publish an interim report setting out initial findings in November.
Notes
The Office for National Statistics calculated that civil engineering added around £23 billion to the UK economy in 2023.
The National Audit Office published its lessons learned report on competition in public procurement. The review found that, whilst the benefits of competition were well understood, existing structures to promote the use of competition were not working as well as intended such as the application of central guidance and engaging the market.
The National Infrastructure Commission estimated that both public and private sector infrastructure investment will need to increase by 30% - 50% over the next decade.
The National Infrastructure Commission identified four interrelated factors that are holding back infrastructure projects and indicated that system-wide improvements could translate to savings of 10% - 25% across infrastructure projects.
The National Infrastructure Commission estimated that rail and road, excluding HS2, accounted for around 70 - 75% of government expenditure on economic infrastructure in 2022. The UK Government defines economic infrastructure as transport, energy, water, flood risk management, digital, and waste.
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