Labour's gravy train: Big infrastructure projects are proving a big winner for Britain's army of shareholders

As marmalade-droppers go, it took some beating. News that the Government is to pay two accountancy firms half a billion pounds to train civil servants on skills including how to use artificial intelligence came as a big surprise to Whitehall watchers.The award of up to £465million to KPMG and EY – the biggest to any of the big four accountancy firms since at least 2012 – came despite a pledge from Labour when it came to power two years ago to halve spending on consultants that had hit record levels during the pandemic.But it is not just the bean-counters who are making hay from taxpayer-funded contracts.Some of Britain’s biggest companies are also cashing in on a series of major infrastructure, outsourcing and defence projects funded by the public purse.With one exception, the ten biggest suppliers to the Government listed on the stock market have seen their share prices soar under Labour, an analysis by The Financial Mail on Sunday shows – see table. Bumper times: The biggest winner is construction firm Balfour Beatty, whose shares have more than doubled since July 2024The biggest winner is construction firm Balfour Beatty, whose shares have more than doubled since July 2024.Its major contracts include the HS2 high-speed rail project between London and Birmingham, new nuclear power stations at Hinckley Point and Sizewell, and designing and building the Lower Thames Crossing road scheme.Balfour Beatty netted £3.1billion of direct public sector revenue in 2024-25, according to government procurement data provider Tussell – the highest of any supplier.That is a giant chunk of its total turnover of £10.7billion, especially given that Balfour Beatty – like many of the state’s biggest contractors – also earns substantial sums from its activities abroad, especially in the US.It’s a welcome return to form, as far as shareholders in the FTSE 100 company are concerned.‘Balfour Beatty used to be viewed as a risky contractor with weak cash conversion and a nasty habit of issuing profit warnings,’ says Dan Coatsworth, head of markets at broker AJ Bell.Also enjoying the public spending spree is Kier, a rival builder and another HS2 contractor with £2.4billion of taxpayer-funded revenues whose shares have jumped by almost three-quarters in just over two years.‘Kier was dogged by high levels of debt and a muddled business structure,’ notes Coatsworth. But he added: ‘Both it and Balfour Beatty have sorted themselves out and that’s driven a major share re-rating.’Kier – which also works on prisons, hospitals and nuclear power stations – recently said results would be at the top end of expectations, with 90 per cent of its estimated £4.4billion of revenues for the year to June 2027 already in the bag.Defence companies also feature prominently as military spending ramps up.‘BAE Systems, Babcock and Serco have all ridden the boom in defence stocks as investors get excited about various governments around the world pledging to spend more money on military and cybersecurity capabilities,’ Coatsworth noted.The defence trio had combined revenues of £3billion from UK government contracts in 2024-25, according to Tussell.The spending spree is set to continue as defence contracts – like much public sector work – tend to be long-term, meaning earnings visibility is high, which is something investors value.But doubts remain over how Chancellor John Healey will plug an estimated £5billion funding gap in the Defence Investment Plan over the next four years – let alone meet its Nato target of spending 3.5 per cent of annual output on the military by 2035.The boom in AI has turbocharged shares in technology services group Computacenter.The company, which recently joined the FTSE 100 index of the largest UK stock-market listed companies, helps large organisations such as the police and NHS to build and run their digital systems.Taken together, shares in the top ten public sector contractors have risen at more than twice the rate of the FTSE 100 since Labour came to power.‘The common theme uniting most of these names is success in convincing the market they’re no longer dragging their heels as businesses,’ says Coatsworth.‘That’s been a massive driver of share price gains since Labour got into power as investors have grown more confident in their earnings outlook, financial position, and strategic potential.’The only one to miss out on the bonanza is Capita, the outsourcing firm which has become a byword for controversy.In the latest crisis, its shares crashed by more than a fifth after it revealed the bill for cleaning up the mess at the civil service pension scheme it runs could knock up to £40million off annual profits.Thousands of recently retired Government officials have yet to receive their first pension payment, leaving some struggling to pay bills and buy food.Capita chief executive Richard Holroyd told MPs that he had considered resigning over the debacle, which has seen the Government withhold multi-million pound payments to the company because of the service shortfalls.Capita is now in full damage-limitation mode.‘There is no profit motive or profit driver in this,’ Holroyd told the Public Acccounts Committee. ‘We have to rebuild trust. What we are thinking about is reputation across the rest of the business and how we recover here.’Which just goes to show not all public sector contracts are a one-way gravy train.When some hit the buffers they can have dire real-world consequences.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you