Competition and Markets Authority launches review of civil engineering for roads and railways

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.

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.

It 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.

It comes at an important time for the sector as the government sets out its long-term plan for the country’s infrastructure and undertakes legislative reforms. 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. Improving how the market operates could enhance productivity, cut costs for businesses and support growth across the wider economy.

The National Infrastructure Commission, now part of NISTA (National Infrastructure and Service Transformation Authority), recently estimated that public and private sector investment will need to increase by 30% to 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% to 25% across infrastructure projects.

Road and railway projects account for around three quarters 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.

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.”

Chief Secretary to the Treasury, Darren Jones, said “Upgrading the country’s economic infrastructure is essential for unlocking growth across the country. 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 “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.