BCIS responds to Scottish Budget

The Scottish government has delivered its 2025-26 budget, setting out its spending priorities within devolved powers.

Within the budget there was an acknowledgement of the increased pressure on delivering infrastructure projects caused by construction cost inflation.

In the introduction to the fiscal context, the government said: ‘The latest OBR forecasts following the UK Government’s Autumn Budget also show that by 2028‑29 our UK capital funding is set to increase in real terms by 12.6% in comparison to 2024‑25.

‘This represents a significant change in the UK Government’s capital investment plans but remains insufficient to meet our infrastructure investment needs. We still face significant pressures due to the level of high inflation experienced in the construction sector, which has permanently increased the cost of delivering infrastructure.

‘Across the public sector, there remain significant maintenance backlogs that lead to more inefficient, reactive – rather than preventative – repairs.’

Dr David Crosthwaite, BCIS Chief Economist, said: ‘While noting the limited availability of public finance, there is at least some commitment to building projects outlined in the Scottish Budget.

‘The industry had been calling for a pipeline of projects to be published to allow them to plan for future demand levels and this will go some way to providing some certainty of demand, assuming that the announcements are all realised.’

Key announcements for the Scottish construction industry included:

Housing

Investment of £768 million for the Affordable Housing Supply Programme in 2025‑26, according to the government, ‘boosting affordable housing supply across Scotland and enabling housing providers to deliver at least 8,000 homes for social rent, mid‑market rent and low‑cost home ownership. This investment will help tackle the housing emergency while contributing towards our target of 110,000 affordable homes by 2032.’

Health, education and justice

Delivery of new health facilities, including replacing Monklands Hospital in NHS Lanarkshire and the Belford Hospital in NHS Highland.

Further funding (part of a £158 million uplift) to support delivery of 47 schools through the Learning Estate Investment Programme by 2027‑28.

£347 million in the prison estate to continue progress to deliver HMP Glasgow and HMP Highland.

Transport

Almost £1.1 billion for rail services, rail infrastructure and the maintenance of the network.

Over £550 million investment in critical safety, adaptation, maintenance and improvement priorities for trunk road network, with £157 million of that progressing major trunk road projects, including the dualling of the A9 and improving the A83.

Over £237 million invested in maintaining and improving ports and harbours.

Green energy

Almost tripling investment in offshore wind to £150 million, advancing commitment of up to £500 million over five years to support the offshore wind sector.

Energy Efficiency

Over £300 million for the Heat in Buildings Programme, maintaining 2024‑25 levels of investment, to ‘accelerate energy efficiency upgrades in homes and businesses across the country.’

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