Scotland’s Construction Market Splits as Public Work Nears £20bn

Rider Levett Bucknall now puts Scottish tender-price growth at 3.5% a year through 2029, led by public and infrastructure work. In March 2025 Martin McConnell, RLB partner for Scotland, called the sector buoyant and pointed to a strong pipeline. His Q3 2026 Construction Market Intelligence note still finds that work, after construction employment fell 5.2% in 2025 and private housing stalled.

The visibility tool he welcomed has filled out. The labour warning did not ease with it.

Public Work Is Carrying a Split Market

McConnell’s latest Scotland note says public pipelines and infrastructure remain a strong base, with energy, defence and data centres as long-term drivers of activity. Those sectors are supporting workloads and tender pricing. Funding approvals and delivery timescales still decide how fast the work reaches site.

Commercial and residential development is more subdued. Viability pressures have stalled schemes and deferred investment decisions. Contractors have more appetite to replenish commercial and residential books, RLB says, but they are risk-aware and still favour two-stage deals and early contractor involvement.

The firm’s own activity cycle makes the split plain. Houses moved from peak decline in Q2 2026 to trough decline in Q3. Retail followed into trough decline. Offices, health and infrastructure moved into mid growth. Data centres and industrial work stayed in mid growth, as did apartments.

RLB MARKET ACTIVITY CYCLE, SCOTLAND

Infrastructure already takes a larger share of construction spend in Scotland than in most UK regions. That is now doing the work that a broad private recovery was supposed to do.

Almost £20 Billion Now Sits in the Forecast Tool

The Scottish Futures Trust built the Construction Pipeline Forecast Tool so firms could see public work early enough to hire and buy. The latest SFT update lists 1,429 planned construction projects valued at just under £20 billion, with delivery scheduled through 2035. More than 50 public bodies now feed it, including Scottish Water, island community trusts and third-sector groups.

Just under £16 billion of that work is expected to complete by 2030. About 55% of that slice sits in housing, civil engineering and education. Some 650 listed projects are valued below £2 million, which is the band most of Scotland’s small builders can actually chase.

Claire Pollock, associate director in SFT’s data and insights team, said increased visibility helps firms plan with more confidence and lets public bodies see what others are doing. The Construction Leadership Forum already named pipeline transparency as one of ten pillars in its Transformation Action Plan. The irony is the horizon. Ian Hughes, CITB’s engagement director for Scotland, notes that most construction companies employ fewer than five people and work from order books that look only three to six months ahead.

FROM THE 2025 CALL TO THE Q3 2026 NOTE

1. March 2025: RLB’s Q1 2025 Scotland note forecasts about 3% tender inflation over the next 12 months, cites a need for more than 26,000 extra workers over five years, and has McConnell describing the sector as buoyant.
2. 25 March 2026: Vestas sets out plans for a Scottish nacelle and hub factory, with more than £215 million of capital and up to 500 direct jobs if enough UK orders land.
3. 31 March 2026: The Federation of Master Builders’ H2 2025 survey still shows a +28% net rise in Scottish workloads, while 72% of firms report a skills hit.
4. Q2 2026: RLB records the George Square contract award in Glasgow, the £83 million Forres Academy job to replace a RAAC-affected school, and the Vestas plan, while warning that planning drag and labour shortages still hold the market back.
5. September 2026: RLB’s Q3 Scotland note shifts the language to cautious optimism, holds tender inflation at 3.5%, and flags civil and specialist labour in remote places as the constraint that will last into 2027.

A long public ledger does not, by itself, shorten those order books. It does tell a micro firm that the next five years are crowded with other people’s programmes.

Where Energy and Data Centres Keep Winning Work

The Construction Industry Training Board’s Scotland outlook puts 2025 construction output at £18.6 billion, with infrastructure 29% of the total, about double the UK share. Output rose 5.9% that year. Infrastructure expanded 17.2%, public non-housing 20.3%, and housing repair and maintenance 16.3%.

The Scottish Government’s Infrastructure Delivery Pipeline for 2026 sets out £11.1 billion from April 2026 to March 2030, including remaining A9 dualling, rail electrification in Fife and the Borders, and new prisons in Glasgow and the Highlands. CITB expects infrastructure output to rise 5.0% a year on average from 2026 to 2030, with public non-housing up 4.3% a year through 2029.

On 25 March 2026 Vestas said it wants a nacelle and hub factory in Scotland for its V236-15.0 MW offshore turbine. The UK government said the plan would create up to 500 skilled jobs. RLB had already logged the investment at more than £215 million. The final decision is conditional on enough UK orders in Allocation Rounds 7 and 8. Production, if it proceeds, would start in 2029 or 2030. Henrik Andersen, Vestas’s chief executive, said a Scottish assembly plant would create hundreds of local jobs and support more across the supply chain.

Grid-scale storage sits in the same energy build-out. Qair’s approved battery storage project in Aberdeenshire is the kind of civil and electrical package that now competes with roads, schools and data halls for the same specialist trades.

RLB still rates data centres as mid growth. Labour is already tight where the work needs sector-specific skills and security-cleared staff. Large halls also have to clear local fights over power, water and land. A proposed campus beside Auchtertool in Fife has drawn a sustained campaign against its scale, which is a planning risk sitting on top of the skills risk. Conversion from pipeline to site is not automatic.

Housing’s Trough Decline and the Stalled Sites

Residential work is constrained by viability, funding and affordability, RLB says, with deferred decisions and stalled schemes in parts of the market. Affordable housing and well-supported regeneration hold up better. Overall activity is expected to stay measured in the near term. The Clayton Hotel in Edinburgh is the commercial exception RLB names, having broken ground in the quarter.

CITB’s output path matches that caution. Private new housing is forecast to grow only 0.6% a year from 2026 to 2030. Public new housing is expected to decline 0.9%. Housing repair and maintenance, 37% of 2025 output after a 16.3% jump that year, is forecast to fall 4.0% in 2026 and 0.9% across the five years to 2030, as higher inflation squeezes household budgets.

Commercial work is selective. Well-funded schemes in strong locations continue, and there is a pivot to refurbishment and refits of occupied stock, which is a narrower version of the office story RLB told in 2025, when employers still wanted best-in-class space to pull staff back in.

Gordon Nelson, FMB Scotland director, said the country finished 2025 almost as strongly as it started, with a +28% net rise in workloads, second only to Northern Ireland. Enquiries, though, dropped 40 percentage points from the first half, from a +56% net balance to +16%. The survey closed before the Gulf conflict began, he said, and steel and cement prices were likely to rise as those effects arrived.

After 10,000 Jobs Went, the Recruitment Target Fell

The 2025 RLB note leaned on a CITB figure of more than 26,000 extra construction workers over five years, a 2024 to 2028 vintage total of 26,100. The new Construction Workforce Outlook for Scotland, covering 2026 to 2030, cuts the recruitment need to 2,590 extra workers per year, or about 12,950 over five years, down from 3,590 a year in the previous edition.

That cut is not evidence the skills crisis eased. Construction employment fell 5.2% in 2025, more than 10,000 fewer people than in 2024, leaving a headcount of 196,510. CITB expects a further 1.4% fall in 2026 before growth resumes in 2027. The 2030 workforce is put at 199,750. The 12,950 extra recruits are the people needed to cover that path plus replacement, not a net headcount rise of the same size.

Scotland had 12,875 construction businesses with at least one employee in 2025. Some 85% are micro firms with fewer than 10 staff. Only 285 firms have more than 50 employees, 2.2% of the employing stock. Median hourly construction pay was £18.50, with wages up 3.3% in 2025, slower than the UK’s 3.7%. Vacancies in March 2025 were still 40% above 2019.

The FMB and Chartered Institute of Building State of Trade survey found a lack of skilled tradespeople in H2 2025 at 72% of Scottish firms, up from 61% in the first half. That led to job delays at 49% of firms and cancelled projects at 22%. Some 30% said the shortage halted plans to expand.

HARDEST TRADES TO HIRE IN H2 2025

• Carpenters: 30% of firms named them the hardest trade to recruit.
• Bricklayers: 29% reported the same squeeze on bricklaying crews.
• Plumbers and HVAC: 23% could not fill heating and plumbing jobs.

Specialist gaps ran even wider. Some 57% struggled to hire for sustainable building practice, 58% for new technologies, 58% for conservation and heritage, and 56% for new planning rules. Nelson said the minimum wage for 16- and 17-year-olds and apprentices has risen 66% since March 2023, while apprenticeship funding has stayed flat, and that local firms are reaching the limit of what they can absorb.

CITB SCOTLAND WORKFORCE OUTLOOK, 2026 TO 2030

• 2025 output: £18.6 billion, with infrastructure 29% of the mix.
• Five-year growth: 1.7% a year on average from 2026 to 2030, after a 0.7% fall forecast for 2026.
• 2030 headcount: 199,750, after the 2025 payroll drop.
• Pay in 2025: median £18.50 an hour, up 3.3% on the year.

Hughes’s circular challenge sits underneath those figures. Training only pays if a committed pipeline turns into jobs a micro firm can see inside six months. A 2035 dashboard does not, on its own, put a carpenter on a site in 2026.

Tender Prices Stay on a 3.5 Percent Path

In Q1 2025 RLB told Scotland to expect about 3% tender inflation over the next 12 months and a steady 3% a year from 2026. The Q3 2026 Scotland series now sits at 3.5% for 2026, 2027, 2028 and 2029. That is a touch firmer than the old 3% path, and a step down from the 4% 2026 reading on RLB’s Q2 Scotland chart.

Tender prices for infrastructure have held up, RLB says, because pipelines are strong and input costs still bite. National BCIS tender-price figures sit lower than RLB Scotland in 2027 and 2028.

TENDER PRICE GROWTH, RLB SCOTLAND AND BCIS

The BCIS Scottish Contractors Panel, drawing on major contractors in Scotland, said input costs were up 5% in the year to Q3 2026, with quarterly growth slowing to 1.75% from 4.5% in Q2. Two-thirds of panellists reported a slight reduction in the volume of projects expected to reach tender over the next 12 months. Subcontractors are still shying away from single-stage bids, citing re-pricing, thin estimating benches, and the location and timing of jobs.

FMB members felt that cost squeeze in H2 2025. Some 75% reported rising material costs, 57% wage increases, and 61% raised their own prices. Half, 51%, reported lower-than-expected profits or losses. A fifth feared for business viability, and 16% made redundancies. RLB still expects input-cost inflation to ease heading into 2027, even with the conflict in the Middle East, while steel, electrical components and energy-intensive products stay exposed to energy-market swings.

The Remote Civils Problem McConnell Still Flags

The 2025 warning was that the industry badly needed investment in skills to replenish the workforce. The 2026 version is more precise. Labour remains a pressure point in civil engineering and specialist trades, with the greatest concern in remote locations and on jobs that need data-centre skillsets or security clearance.

Looking towards 2027, there are reasons for cautious optimism as input cost pressures are expected to ease, but labour availability in civil engineering and specialist trades, especially in remote locations, will remain an important consideration.

Martin McConnell, Partner for Scotland, Rider Levett Bucknall

CITB still forecasts 1.7% average annual output growth from 2026 to 2030 after a 0.7% dip this year. That growth is concentrated in infrastructure and public non-housing, the same places where remote civils crews are already scarce. FMB builders, for all the skills strain, were more optimistic than not about the first half of 2026, with 48% positive, 8% negative and 38% neutral.

The public ledger is now large enough to plan against. The payroll that would turn it into completed roads, halls and homes is smaller than it was when McConnell first called the market buoyant, and the trades that have to travel north and west are the ones he still cannot count on.