Government transport spending up £14bn in four years

The Department for Transport (DfT) spent £13.8bn more on transport project invoices last year than in 2019, with construction and engineering firms receiving about half.

Construction expenditure increased by 80 per cent from £7.9bn to £14.2bn in the same period. Little of that spend was seen by smaller firms, according to public sector procurement analyst Tussell.

Joint ventures (JVs) took the lion’s share of the increased investment, while only 3 per cent of DfT’s procurement spend went to SMEs.

HS2 contractors dominated the list of the DfT’s biggest suppliers, topped by BBV (Balfour Beatty Vinci).

The JV, which is building 90km of the route from Warwickshire to Staffordshire, was paid £2.9bn by the DfT last year. It has been the department’s biggest supplier for the past three years.

The EKFB JV between Eiffage, Kier, Ferrovial and Bam was the DfT’s second biggest supplier in 2023, receiving £1.9bn.

EKFB is building 80km of the HS2 route to the south of BBV’s section.

Despite the big yields for HS2 contractors, Tussell found that new contract awards had declined dramatically since the Covid pandemic as uncertainty around the megaproject grew.

Having signed £2.9bn worth of HS2 contracts in 2020, the DfT awarded totals of £200m, £449m and £183m in the three consecutive years.

Materials firm Land Recovery Enterprises was the DfT’s biggest SME supplier in 2023, receiving £39m.

Railway maintenance firm Loram UK and Hull railway contractor Colt Construction were other big winners – receiving £34m and £20m respectively.

Civil Engineering Contractors Association chief executive Alasdair Reisner told Construction News that the increase in expenditure was “not hugely surprising”.

He added: “Unsurprisingly a lot of DfT’s expenditure is on large capital projects (HS2, National Highways, etc.) and as such these arms-length bodies will typically engage large suppliers as main contractors.

“We know from previous research that a large proportion of this work is subsequently subcontracted to smaller (although not necessarily SME) businesses.”

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