The public sector lighting market increased by 23% from 2003 to £270 million in 2008 and is expected to rise marginally in 2009, reflecting ongoing expenditure programmes and expenditure in health and ‘other’ sectors. Current forecasts indicate average annual declines of 1-3% from 2011 as government spending is reviewed, resulting in a forecast market value for 2013 of £265 million. 

The market has three major end-user markets – health, education and infrastructure – which account for around 79% of the market. The remaining market is made up of a number of other end users such as defence, prisons, public offices, museums etc.

The public sector lighting market is dominated by the education sector which accounts for 47% of the market, followed by infrastructure with 17% share and health with 15%. ‘Other’ end users make up the remaining 22% of the market.

2008/9 has experienced significant increase in public sector expenditure as the government seeks to stimulate the UK economy through increased public spending, particularly through capital expenditure projects.

Pressure on pricing within the market is continuing with competition for public contracts high as private sector construction declines. Falling prices are further enabled by a considerable decline in raw material prices, which until late 2008 had been boosting market value by increasing prices.

Changes to legislation on energy efficiency and carbon emissions as well as volatile fuel prices has seen increased development of energy efficient products and integrated lighting systems with wider interest in these products throughout the public sector.

Public expenditure is likely to slow in the short to medium term as the government revises spending in view of the General Election due in 2010 and to manage the large budget deficit built up by current spending levels.

Energy efficient products and monitoring and control systems for lighting are expected to continue to gain share in the market leading to increased specification of higher value products in the long term.

The process of consolidation of suppliers is likely to continue as large multi-national organisations continue to acquire business units to enhance product portfolios and as less profitable suppliers are forced to close or be acquired in the current economic climate.