Impact of judicial review reform on the costs of infrastructure projects12 March 2025

An overview of the cause of cost overruns on large infrastructure projects

1. Lack of clear strategic direction

In the absence of a stable, long-term infrastructure strategy by the UK government, UK infrastructure has been subject to unpredictable public capital investment. The report highlights that the UK has seen more year-to-year volatility than the other nine largest economies.⁴ This uncertainty has deterred investment into projects and undoubtedly slows down development.

2. Challenges with project clients and sponsors

There is often poor collaboration between those setting the budgets and those executing the projects. Poor early-stage planning can lead to unrealistic budgets and inefficient design work which may change depending on the objectives of the project sponsor over time. The report gives the example of the TransPennine route upgrade which was originally designed to move from diesel to electric trains at a cost of £289m in 2011. The project plans changed due to the sponsoring entity adapting the plans to also increase capacity. The works are now expected to cost between £6.2 and £6.5bn.

3. Constrained supply chain

Labour productivity in the construction sector and whole economy of the UK has not increased by a meaningful amount since the start of the 2000s as stagnant productivity has hampered both.⁵

4. Inefficient consenting and compliance issues

These challenges place strain on party relationships and could lead to investors and project sponsors choosing more favourable jurisdictions.

In the UK, the approval process for large infrastructure projects increased by 65% between 2012 and 2022, to an average of four years.⁶ Large infrastructure projects are also more prone to judicial review and the rate of judicial review of such projects has also increased dramatically over the last decade, rising by 48% since the early 2010s.⁷ The danger is that parties become far more risk-averse to avoid or mitigate consent issues, leading to greater expenses. Uncertainty causes developers to make design changes to try and appease their critics or overdesign their project to limit the risk of a legal contest. Not only do these corrections themselves add cost, but navigating the bureaucracy to determine the changes required also adds great expense.

The UK is regarded as a leader in infrastructure regulatory standards. This can benefit project timelines as clear regulations should lead to predictable milestones, and increased planning efficiency. Despite an internationally reputable compliance landscape, the UK regime has recently been criticised for adding costs to parties. Standards are rapidly changing, and this removes planning certainty. For example, Hinkley Point C developers were required to make 7,000 alterations to designs that had been used in previous international stations.

In addition, large project teams can cost around £1.5m to run per month⁸ and will usually have to continue their project work during legal disputes as well as provide information to legal teams. Delays caused by judicial review can therefore cause significant financial burden on the parties.

R (On the Application Of) v Secretary of State for Energy Security and Net Zero & Ors [2024] EWCA Civ 12 is an example of judicial review significantly delaying the development on an infrastructure project. The appeal was brought by residents against a decision to grant two development consent orders. The consent orders related to two significant infrastructure projects: East Anglia ONE North and East Anglia TWO Offshore Wind Farm. The residents were concerned with the cumulative effects of the developments and possible flood risks caused. The Court of Appeal dismissed the appeal. The judicial review process took over two years, significantly delaying the project. The interruption is even more frustrating for developers, as the courts concluded that there was no legal basis for opposing the projects.

Another prominent case of judicial review delaying a project was the review of Heathrow airport’s new runway. Following the consultation period, the Secretary of State laid the national policy statement relating to the building of the new runway before Parliament in June 2018. National policy statements are designed to set out objectives for the development of nationally significant infrastructure and are designated as national policy statements under section 5 of the Planning Act 2008. The Airport national policy statement (“ANPS”) set out a policy framework within which to consider an application by a developer for a development consent order (“DCO”)⁹ for a new runway. The ANPS and other national policy statements are “the primary consideration in the determination of an application for a DCO”.¹⁰ This became the legal framework which Friends of the Earth Ltd and Plan B Earth (the “Applicants”) sought to judicially review.

The Planning Act also set out several sustainability objectives which the Secretary of State must comply with when designing national policy frameworks. The Applicants brought a judicial review challenging the lawfulness of the development based on lack of consideration of several sustainability requirements under section 5 and section 10 of the Planning Act and failing to take government’s commitments under the Paris Agreement into account. Applications to challenge the project came in at the divisional level in May 2019 and it was not until December 2020 that the Supreme Court ruled that the development and policy as lawful.

While it is important that there is the ability to question whether developments should proceed, the loss of time for dealing with legal challenges is not always priced into budgets at the outset of infrastructure projects. This can lead to cost overruns for unexpected or prolonged challenges.