Chamber and committees

Good morning. What has been said leads on quite neatly to my questions on capital expenditure. We know that block grant funding from the UK Government is the largest component of the Scottish Government’s capital funding. The commission’s projections suggest that that funding will, in nominal terms, be cut by 14 per cent between 2023-24 and 2028-29. How will that cut affect the productive capacity of the Scottish economy?

Good. Thank you.

Okay, thank you.

I have a last wee question just to finish off. It strikes me that, because of the limitations instilled by a fixed budget, the narrative is continually about revenue spend, for very good reason—of course that needs to be scrutinised and monitored—without there necessarily being the same kind of awareness in the body politic of the implications of capital expenditure in investment terms. Is that something that, as economists, you see happening almost as an inevitable consequence? I can see that you are nodding.

I will explore that a bit more. Could you all, as top-notch economists, say how productive capacity can be affected by low levels of capital expenditure? For example, you have talked about AI, research and development, productivity, economic growth and sustainable wellbeing or otherwise. It would be useful to get that on the record.

I meant with regard to changing something at significant scale—such as, for context, the 14 territorial boards and the five national boards—and restructuring it. I mentioned the Centre for Sustainable Delivery. I am talking about that scale of change and organisational restructuring. Is that something that you would expect to see mandated by the Government rather than being fed upwards from you or people who you face off with in other boards?

To follow on from that, you have indicated that the Scottish Government may receive further funding from sources other than the block grant. What are those sources? What do you see as the key risks for their not materialising? In other words, I am trying to flesh out the extent to which those sources can be relied on relative to the block grant, which we know has been significantly cut.

Good morning, and thank you for joining us. Last week, we had interesting evidence from Police Scotland in which it was made clear that that body simply would not have been created had it not been mandated by Government. I want to ask you some perception questions about your world. In Scotland, with 5.5 million people, we have 14 territorial boards and five national boards, and there is duplication of human resources directors, information technology directors and finance directors. Have you and your equivalents had discussions about attempting to change the scale and the current organisational structure? I know that the British Medical Association has released a report on that, but have you looked at the issue or suggested some change with your face-off equivalents in other boards?

I give these opening remarks with some trepidation, as I know that many esteemed academics will be speaking about the tercentenary of Adam Smith this week. I congratulate the vigour with which Professor Graeme Roy and Roger Mullin have pursued celebrations at the University of Glasgow and in Kirkcaldy respectively. Indeed, the inaugural event by Glasgow university was held in the Scottish Parliament, which is fitting. As Smith expressed in his “The Theory of Moral Sentiments”, this place should ideally be where

“To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature”.

Many people in Scotland recognise the name Adam Smith, yet too few of those and the tourists who walk past his statue on the High Street of Edinburgh, Panmure house or his grave at the Canongate know of his lasting impact. Although we do not know the exact date of his birth, we know that Smith was baptised on 5 June 1723 in Kirkcaldy old kirk.

Smith studied logic, metaphysics, maths, Newtonian physics and moral philosophy at Glasgow university. After a short spell at the University of Oxford, he returned to Glasgow university, where he became a lecturer then rector. He then moved to Panmure house in Edinburgh, where he died in 1790.

He was a leading figure in the Scottish enlightenment, which produced a remarkable outpouring of ideas spanning a wide range of areas including engineering, chemistry, political economy, philosophy, literature, medicine and many other areas of intellectual life. The Scottish universities, not least Glasgow university, were central to that in providing a home for the exchange of ideas across disciplines.

Smith was greatly influenced by Francis Hutcheson, the Glasgow university professor and philosopher and, alongside his friends David Hume, Joseph Black, James Hutton, Dugald Stewart and Robert Burns, they took Scotland to the world. It is no coincidence that, in the 1760s, Voltaire, whom Smith visited many times in France, noted:

“We look to Scotland for all our ideas of civilization”.

The Scottish enlightenment asserted the importance of human reason expressed as ideas and a rejection of any stance that could not be justified by reason. Arguably, our current political world has much still to learn. Of course, he is best known as one of the founding fathers of economics, with his ideas still permeating economic theories today. Some would say that, to understand his political economy, you must first have read and understood his “The Theory of Moral Sentiments”. That articulates that we are, above all else, social beings and that our morality—or, in today’s language, our empathy—is guided by that fact.

Although reason is important, it is trumped by the themes that are set out in “The Theory of Moral Sentiments”: prudence, justice, beneficence and self-command, all of which are underpinned and developed by conscience or morality. Again, there is much in his book to guide us in Parliament. I will quote again. He said:

“We are but one of the multitude, in no respect better than any other in it.”

As put more colloquially by Robert Burns, we are all Jock Tamson’s bairns.

Smith went on:

“The prudent man is always sincere, and feels horror at the very thought of exposing himself to the disgrace which attends upon the detection of falsehood”.

His three natural laws of economics—the law of self-interest, the law of competition and the law of supply and demand—were laid out in his lectures at Glasgow university. Many of those concepts are fundamentally misunderstood and have been misappropriated, not least by the Adam Smith Institute in London.

By the time he wrote “An Inquiry into the Nature and Causes of the Wealth of Nations” in 1776, Smith had seen corruption and unfettered imperialism mixed with power held in the hands of just a few. The requirement for balance between competition, capitalism and a free market, known as “the invisible hand”, points to what we would now regard as an acute need for sustainability in economic growth.

He also had commentary to make about sensible trade, citing the example of wine making in Scotland: just because we could, that does not mean to say that we should, if the bottom-line cost of said trade is not commercially viable. He was also clear about the damage that is caused by tariffs. I suggest that some Brexit-supporting Conservatives reread that particular section in “The Wealth of Nations”.

In my closing remarks, I will return to Professor Graeme Roy and draw from an article that he wrote in December 2022. He said:

“Crucially, Smith is a ‘political economist’ and not just interested in understanding economic trends. He seeks to make the case for the institutions and structures in our society—such as the shape of markets—to be cohesive, fair and resilient. As we face complex intergenerational and global challenges, be it the climate emergency, rising inequality, or the cost-of-living crisis, there is much we can apply from Smith’s writings to today”.

Roy finished by saying:

“In today’s often toxic political culture and binary policy debates, a recognition that the big global policy challenges that we face require careful thought and, above all, respectful discourse between different sides of an argument”—

the use of reason, one could argue—

“is perhaps the greatest lesson we can learn from one of Scotland’s most famous sons”.

I look forward to the next 300 years of global influence. Thank you, Adam Smith.

The debate is already a fascinating one. In preparing for it, I, too, tried putting a question in ChatGPT—I asked, “Is Stephen Kerr MSP more effective than a potato?” I can confirm that it was not able to answer that question, so it still has some way to go.

Arguably, artificial intelligence is similar to quantum mechanics in that, if you claim that you understand it, you are merely proving that you do not. However, we know that it will change everything; on that, we all agree. Not one area of our lives or our societies will escape its pervasive influence. An accessible example is in the field of medicine, where we know that the computing power of AI to assess and find patterns in huge data sets will revolutionise pathology and, therefore, outcomes for some of the world’s most challenging diseases.

The concept of big data has been around for some time and the technology that allows for rapid processing has been developing at speed, but it is the complex algorithms in machine learning that have scaled up significantly and propelled the exponential potential of AI. Data must not be underestimated as a fundamental enabler. All public sector agencies and the Scottish Government will need to increase their understanding of the potential of public sector data as an enabler for the use of AI.

That issue is one that members of the Finance and Public Administration Committee have started to consider as part of our inquiry into public sector reform. The strategy that the Scottish Government developed in March 2021 and updated in August 2022 is a good start. It shows an appetite for support to be provided to the multitude of agencies that can help to promote the use of AI, and I am pleased to hear that the minister plans to look afresh at it.

I am grateful for the briefings that members have received for the debate. We have had some good input from the likes of Scotland’s Futures Forum and the University of Edinburgh. I think that we can all agree that our institutions are contributing to the growth of AI with the excellence for which Scotland is known.

The title of today’s debate specifically mentions inclusion, trust and ethics, so I would like to explore those issues a little more.

I turn first to inclusion. Members who know me well will have heard me speak often of how women as a sex class are often disproportionately affected in a multitude of ways in society. Earlier, I spoke in today’s members’ business debate about the underrepresentation of women in tech. AI represents a new frontier. The engineers who are developing the black-box algorithms are mostly men, and I fear that that will lead only to bias in the decision making of machine learning.

Recent estimates suggest that, globally, women make up 26 per cent of workers in data and AI roles, while in the UK that percentage drops to 22 per cent. That said, there is still a lack of data about the global AI workforce that uses any of the measures that we might look at, including age, race and geography. Nevertheless, I suggest that issues similar to those related to the underparticipation of women in science, technology, engineering and mathematics—such as high attrition rates, differing role types and lower status—will also come to bear in AI.

Willie Rennie mentioned the potential for job losses, which is another issue that we know will disproportionately impact women, given that many will be in retail and secretarial roles. What may not yet fully be appreciated is the extent to which AI will ultimately affect a multitude of professions, including the highly paid sectors dominated by men.

What shall we say about ethics? Whose ethics are they anyway, and who governs them? It is fair to say that Governments of all hues are behind the curve and still rely on the values and principles being developed by agencies such as the United Nations Educational, Scientific and Cultural Organization.

While researching for this debate, I was pleased to discover that the University of Edinburgh has conducted interdisciplinary research into the ethics of AI and has outlined five core themes: developing moral foundations for AI; anticipating and evaluating the risks and benefits; creating responsible innovation pathways; developing technologies that satisfy ethical requirements; and transforming the practice of AI research and innovation. However, I think that those themes will provide a focus not on end goal or consequentialist ethics, but rather on deontological ethics—that is, on creating frameworks and processes. We have some way to go.