The Scottish Budget on 13 January was accompanied by a multi-year Scottish Spending Review and Infrastructure Delivery Pipeline.
Below are some key points for businesses in the sector and public sector organisations.
Procurement pipeline and opportunities
The Infrastructure Delivery Pipeline sets out specific investment plans totalling £11.1 billion, with more projects expected to move into the Pipeline as business cases are approved over the Spending Review period.
There is now improved medium-term visibility for contractors, developers and supply chains planning workload and investment decisions, with key opportunities including:
- Affordable housing delivery: 36,000 affordable homes over four years (at least 70% for social rent).
- Transport infrastructure: £1.2 billion in rail fleet and ferry vessel renewal.
- Health infrastructure: Over £500 million in primary and community care infrastructure.
- Offshore wind: £93 million of capital funding for offshore wind infrastructure and supply chain development.
- Prison infrastructure: Over £700 million for HMP Glasgow and HMP Highland.
Private finance: The Mutual Investment Model in a Primary and Community Care Investment Programme
See page 6 of the Infrastructure Delivery Pipeline
The Scottish Government is exploring the use of the Mutual Investment Model (MIM) to deliver a significant programme of community health centres over the coming decade, creating a network of local care and wellbeing centres across Scotland (expected capital value: over £500 million).
MIM is the latest of the various PFI/PPP variants to be used in the UK and was first used for three projects in Wales. After a pause of some years, there has been much recent speculation that these financing techniques might be used again due to capital budget constraints. Procuring authorities and investors familiar with earlier PFI/PPP, NPD and hub DBFM schemes will quickly be able to grasp the structure of MIM.
Three initial pilot projects are mentioned: Port Glasgow; East Calder and East Livingston; and Cowdenbeath and Lochgelly. These pilots will establish a standardised design and procurement approach for future schemes.
The first tranche (12 schemes in total) includes: South/West Edinburgh, Edinburgh City, Cumbernauld, Hamilton, South Glasgow Langside, East Dunbartonshire, West Ayrshire, Inverness and Nairn, and Kincardine. Future iterations will focus on smaller health centres in rural areas.
Other potential MIM applications
Colleges: A revenue-funded programme may be brought forward, subject to the Scottish Funding Council’s 10-year College Infrastructure Investment Plan (expected in 2026) and business case approval.
Culture: The feasibility of revenue-funded delivery models for cultural storage facilities for national collecting bodies will be examined.
Additionality
The Scottish Futures Trust will lead market engagement to determine the optimum procurement, financing and contracting strategy.
MIM deployment would enable the delivery of additional investment beyond constrained capital budgets, subject to full business case development and robust value-for-money assessment informed by the Scottish Futures Trust’s specialist advice.
The Budget emphasises 'leveraging private investment where appropriate', recognising the private sector’s vital role in delivering Scotland’s infrastructure needs.
A9 dualling programme
Seventy-seven miles (124 km) of the route remain undualled. Transport Scotland had previously indicated that MIM might be used for two sections of the A9 dualling; this will not now happen.
However, the Budget includes nearly £200 million for the dualling of the A9, with the Scottish Government committed to completion of the route by 2035.
Health boards and NHS infrastructure
The Budget provides £22.5 billion for health and social care, including significant capital investment in NHS infrastructure.
- Major capital projects currently in development include University Hospital Monklands, replacement facilities for the Princess Alexandra Eye Pavilion and Belford Hospital, and St Brendan’s Hospital in Barra. The Budget also covers priority maintenance and equipment replacement across the NHS estate.
- In addition, £36 million has been allocated to establish new high street walk-in GP centres, providing additional same-day access.
Employment and business implications
National Insurance
The UK Government’s increase in employer National Insurance contributions is costing the Scottish public sector an estimated £400 million per annum (this UK-wide change affects all employers).
Skills, training and apprenticeships
- Ongoing commitment to Scotland’s apprenticeship programmes, which this year will provide more than 31,000 people in Scotland with a pathway to sustainable, well-paid jobs.
- Funding to enable delivery of 25,000 Modern Apprenticeships, 5,000 Foundation Apprenticeships and at least 1,200 Graduate Apprenticeships in 2026-27.
- £8 million allocated to support delivery of the Offshore Wind Programme, including a new skills action plan to help ensure a skilled workforce for this growing industry.
- £90 million to be invested in employability services, with colleges receiving £8 million to deliver new or expanded initiatives to help adult learners gain the skills and qualifications needed to secure new employment opportunities.
- A new relief for qualifying electric vehicle charging points for 10 years to support net zero ambitions.
How can MFMac help?
Our Infrastructure & Capital Projects team advises both public and private sector clients across the full lifecycle of major projects, from procurement and funding through to delivery and operation. If you would like to understand how the Scottish Budget 2026-27 may affect your organisation, or to discuss upcoming projects, please get in touch.
