The 2026‑27 Scottish Budget which was delivered in January by Scottish Cabinet Secretary for Finance Shona Robison MSP sets out record, but tightly constrained, public investment.
This draft budget will now be scrutinised by the Scottish Parliament before a vote takes places on Wednesday 25 February 2026, which is expected to pass.
In the Budget, housing, infrastructure and transport remain central to workload and opportunity for Scotland’s construction industry, even as overall capital spending is trimmed and reprioritised.
For contractors, the message is one of a solid four‑year pipeline in affordable housing, prisons, transport and maintenance – but within a tougher fiscal environment that will demand efficiency, capacity planning and a sharp focus on value.
Headline picture for construction
Almost £30billion of capital investment is planned between April 2026 and March 2030, framed by the new Infrastructure Delivery Pipeline and the Scottish Spending Review 2026.
Within that, capital spending in 2026‑27 will be £860million (10%) lower than the plans published as recently as June 2025, as the Government rebalances its programme to fit a tighter capital envelope.
Ministers emphasise continuity: a live, rolling pipeline refreshed at each Spending Review and annual Budget, with £11.1billion of specific projects already identified and more to follow as business cases are approved.
For the industry, this means visible workstreams over four years, but also greater scrutiny of deliverability, cost inflation and regional capacity.
Affordable housing and building safety
The Affordable Housing Supply Programme (AHSP) remains the single biggest driver for construction, with £4.1billion of public investment to 2030 supporting delivery of 36,000 additional affordable homes, within a wider up‑to £4.9billion all‑tenure package over the next four years.
Annual AHSP funding is set at £925.9million (2026‑27), £953.4million (2027‑28), £1,036.2million (2028‑29) and £1,184.6million (2029‑30), a rising profile that implies more back‑loaded delivery and a need for the sector to scale up capacity towards the end of the period.
The wider Housing portfolio will invest up to £4.9billion over four years across affordable homes, energy efficiency and building standards, with around 20,000 households per year supported to improve energy efficiency and heat, creating steady retrofit and M&E opportunities.
The Budget and Spending Review confirm continued funding for the Cladding Remediation Programme and a risk‑based programme of Single Building Assessments, sustaining specialist façade, fire‑safety and remediation work.
Taken together, housing policy continues to treat affordable homes as “critical infrastructure”, but sector bodies already warn that current allocations still fall short of what is required to fully address Scotland’s housing emergency – a tension that will shape future budget rounds.
Infrastructure pipeline: prisons, transport and maintenance
The Infrastructure Delivery Pipeline 2026 sets out an initial £11.1billion of named projects and programmes over four years, with the construction sector explicitly recognised as a key delivery partner.
In justice, more than £700million is committed for HMP Glasgow and HMP Highland, alongside wider investment across the justice estate, providing a multi‑year workload in complex custodial projects.
In transport, the pipeline confirms:
continued A9 dualling, including completion of the Perth‑Inverness sections
£1.2billion to renew rail fleet and ferry vessels and associated works
progress on A83 “Rest and Be Thankful” solutions and significant trunk road maintenance and improvement
Over £7billion is earmarked for capital maintenance across the public estate during the Spending Review period, in addition to the named pipeline projects – underpinning sustained demand for repair, refurbishment and lifecycle works across schools, health, justice and transport assets.
The Government is also exploring revenue‑funded models, including Mutual Investment Model‑backed primary care centres and possible college estate programmes, which could add additional construction workstreams outside constrained capital budgets.
Transport and regional connectivity
The Budget allocates £4.3billion for transport in 2026‑27, including spend on rail, roads, ferries and low‑carbon travel.
The Spending Review sets out almost £15billion of transport investment over the period, with priorities including:
trunk road safety, adaptation, maintenance and improvements (including A9 and A96 work).
ferry replacement and port upgrades, with seven electric vessels and upgrades at key island ports.
nearly £1.4billion for low‑carbon and sustainable travel, including active travel infrastructure, bus priority and electric vehicle charging.
For civil engineering and infrastructure contractors, this confirms ongoing opportunities in both major projects and local connectivity, but also a clear expectation of supporting decarbonisation and resilience objectives.
Fiscal, tax and local government context
The Budget raises the Basic and Intermediate income tax thresholds by 7.4%, while freezing Higher, Advanced and Top rate thresholds until 2028‑29, increasing the tax take from higher earners but with only modest gains for most employees.
A “targeted revaluation” of the most expensive 0.4% of homes will create two new top council tax bands (for properties between £1m–£2m and above £2m) by April 2028, and councils are expected to increase council tax further after receiving only a 2% cash‑terms uplift – with potential implications for disposable incomes, local investment choices and planning decisions.
Colleges receive a combined £70million resource and capital uplift in 2026‑27, equivalent to a 10% increase, and the Spending Review commits £250million of additional resource for colleges and universities across the period – supporting construction‑relevant skills and capacity in the medium term.
For the construction industry and SBF members, the overriding message is that public investment will remain substantial, and housing, infrastructure and maintenance are clearly prioritised – but in a context of capital constraint, tougher value‑for‑money tests and structural reform, with growing emphasis on efficiency, net‑zero delivery and long‑term maintenance of existing assets.
