The Scottish Government’s Programme for Government presents challenges for businesses

Executive summary

• The Scottish Government will publish a data centre strategy. Within this parliamentary year (September 2026-August 2027), the Scottish Government has committed to publishing ‘a strategic approach to attracting and securing responsible green data centre investment in Scotland’.  It will set out the clear expectations around environmental sustainability for data centres.
• The Scottish Government is introducing a Bill to mandate heating and energy performance standards for buildings. The aim of this legislation is to reduce direct emissions from Scotland’s buildings in a way that complies with the country’s legally binding climate change targets.
• The Scottish Government remains committed to capping food prices. They intend to establish legal price ceilings for essential food items and have launched a consultation to start the process of legislating for this cap.

What is the Programme for Government?

Every year, the Scottish Government, currently led by the Scottish National Party (SNP), produces a Programme for Government (PfG) setting out its policy agenda for the next 12 months. This year’s edition also covers the priorities for the whole five-year parliamentary term, because it is the first programme produced since May’s election.

The Scottish Government have responsibility over vast swathes of policy including certain taxes, planning and control over highly regulated sectors too, meaning there is no shortage of areas where ministers can have an impact on businesses – for better or for worse.  Some of the policies laid out in this Programme for Government will pose challenges to the businesses required to enact these changes.

Are price caps for essential foodstuffs coming to Scotland?

The Programme for Government states that this legislation will be introduced in the first year of this new session of parliament. Pre-election, the SNP suggested that price caps would be implemented hastily, but legislation will have to wait until the consultation closes on 24 November at the least.

The most ambitious policy is the proposed cap on certain foodstuffs, announced by the SNP during the Holyrood election campaign earlier this year. The Scottish Government published the consultation on these plans on Tuesday, proposing that qualifying retailers will be subject to price caps for essential food items.

The law will also be subject to scrutiny by the UK’s Office for the Internal Market, which carefully considers any policy proposals by devolved governments that create divergences within the UK’s internal market. If UK ministers deem that the proposals damage the integrity of the UK internal market, they could be vetoed.

However, it will be prudent for businesses to prepare for how this legislation will impact them. John Swinney made this a key plank of his election offering to the Scottish public, so he will remain committed to the fundamental principles of the Bill, but the parliamentary process offers opportunities for stakeholders to outline how it will impact them. The SNP do not have a majority in Parliament and its committees, so compromise will be necessary if they want to pass the legislation.

What does the PfG say about data centres?

Scotland has a natural appeal as a location for data centres due to its climate, but the Scottish Government wants to ensure that standards are in place regarding their sustainability. The PfG commits to a ‘strategic approach’ to securing data centre investment in Scotland with ‘clear expectations around environmental sustainability [and] resource use’.

It is unclear how these expectations will be enforced, but planning policy is devolved to the Scottish Government, so the SNP have the power to enforce these standards via legislation if that is their wish. Companies with interests in data centres would be advised to monitor these political developments and be prepared to act quickly to protect their interests if a proposal emerges that would threaten data centre investment in Scotland.

New energy performance standards to be imposed on buildings in Scotland?

Another proposal included in this PfG is legislation that aims to reduce emissions from buildings in Scotland. The Scottish Government claim this will be delivered ‘in a timely way’ that complies with statutory targets set out in the Climate Change (Scotland) Act 2009.

The Scottish Government published a draft version of this Bill before the election, but it has not yet been introduced to parliament, leaving scope for the proposals to be amended before the formal parliamentary process commences.

As it stands, the Bill will formally enshrine a 2045 target for decarbonising buildings. In addition, it will give Scottish Ministers regulation-making powers to mandate minimum energy standards for buildings.

Given the increasing political debate surrounding net zero in Scotland, this legislation will receive substantial attention in Holyrood, and it will have an impact on everyone – households and businesses alike.

The Scottish Government is keen to emphasise its green credentials and the SNP may have to rely on the Scottish Greens to pass this legislation in Holyrood, which threatens to take the proposals in a more restrictive direction. If that happens, it will have a negative financial effect on the companies and landlords who may be forced to comply with expensive energy performance standards.

Because the draft legislation provides ministers with regulation-making powers to set minimum standards, businesses and landlords do not have any certainty over what will be contained in these regulations. If firms want to stay ahead of the curve, they will need to monitor how this legislation progresses and consider how this uncertainty could impact their ability to invest for the future.

What businesses in Scotland should expect for the next five years

The Programme for Government has stated that it wants Scotland to be the best place to do business in the UK. The proposals highlighted above clearly present a challenge to that narrative.

But John Swinney promoted politicians with business experience in his recent cabinet reshuffle. So while businesses can expect challenges to arise over the next five years, the lack of any one party having a majority in parliament means that compromise will be necessary for legislation to pass.  This presents an opportunity for businesses who are looking to ensure that policies coming from the Scottish Government align with their interests.

Navigating the Scottish Government’s Programme for Government requires proactive engagement with policymakers. Our Campaigns team works with businesses to shape outcomes on issues like these, so get in touch to discuss how we can support your government relations strategy.