The Scottish budget was announced on Tuesday 13 January. It was light on detail as to what it means for builders, but parts of it are relevant to the construction industry. For the year ahead, what government policies and plans do members need to know about? Here’s an overview for you.
Three delays - but one's a big relief for builders
Delay one: works on existing buildings
In 2021 the Scottish Government launched their Heat in Buildings Strategy. This is about making new laws about the heating and energy efficiency of existing homes and workplaces in Scotland. A key aim is for all homes and businesses having to move to a clean heating system by the end of 2045.
A heat in buildings bill (HIBS) aimed at driving this switch from ‘dirty’ heating systems such as gas boilers, to clean ones such as heat pumps, was originally drawn up by former Green minister Patrick Harvie.
In November 2025 the Housing Secretary Mairi McAllan said she wanted to see "crucial detail" in the UK government's forthcoming warm homes plan before taking HIBS through the Scottish parliament. The result is that the bill is paused until after the Scottish Parliamentary elections in May.
Whether the bill will be resurrected later in 2026 will depend on the results of the election. For the FMB it remains essential that the bill results in stimulating work for local building firms in delivering energy retrofit works.
Delay two: new build
Back in May 2022, Alex Rowley MSP proposed a draft Members’ Bill in the Scottish Parliament which sought ‘new minimum environmental design standards for all new build housing to meet a Scottish equivalent to the Passivhaus standard, in order to improve energy efficiency and thermal performance’.
Alex Rowley, MSP
It’s been over a year since the Scottish government published its response to the stage one consultation. This covering the principles of the Passivhaus equivalent standard. A second consultation on the details- for example on how compliance could be achieved, was meant to be launched before December 2025. This will now be issued in 2026. I will be in touch once more details emerge.
What members need to know now, is that the current implementation date of the new standard won’t be until March 2028. Guidance and approved calculation tools for the standard will be made available sometime in 2026.
We will keep members up to date on this.
Delay three: to a new tax
The Building Safety levy has been delayed by one year. It will now be introduced in April 2028. The money raised will provide funding for Scotland's Cladding Remediation Programme.
Who will pay the levy?
Developers would pay the Levy when they build:
- New homes to sell
- Student flats and build-to-rent properties
- Homes created from converting other building
That there has been a delay will be a relief to Members who are housebuilders.
How to fund skills in Scotland?
One bill the FMB is keeping an eye on is the Tertiary Education and Training (Funding and Governance) (Scotland) Bill.
This bill is considering key changes to how funding is managed and delivered for colleges specifically and skills development more broadly. It focuses on post-school education and skills funding.
The FMB has argued that increasing skills funding for industry is essential as the current system is not financially viable for our members. Skills funding has stagnated while employer costs continue to rise, so we need better targeted financial support to help small and medium sized builders recruit and train apprentices.
Where would the money come from? The proceeds from the UK Apprenticeship Levy have been diverted to other priorities in Scotland, rather than ring-fenced for skills. This needs to change.
We need the full Scottish proceeds committed to skills development and targeted at SMEs to support them to build their workforce.
Local Growth Fund
On the matter of funds and funding, an announcement in January that five regions in Scotland will benefit from a share of a new £140 million UK Government Local Growth Fund. Driving economic growth being the intention.
The five regions’ allocations from this fund over the next three years (26/27 - 28/29) are:
- Glasgow City: £60.9 million
- Edinburgh & South East: £37.8 million
- Tay Cities: £19.5 million
- Ayrshire: £11.8 million
- Forth Valley region: £9.8 million.
What will be funded?
The details are vague but regional projects including infrastructure investment, business support, or skills development are noted. We expect more details about the fund to emerge in March. A key question is whether and how it will benefit small, medium and micro sized businesses, including builders.
Authors
Gordon Nelson
Director, Federation of Master Builders Scotland