The accountant at a friend’s business has just resigned. He’s off to retrain as a plumber on the grounds that artificial intelligence is set to swallow his job with the ruthlessness and finality of Pac-Man hoovering up power cookies, and he wants to get ahead of the game.
It’s a dramatic response to a technology which impinged on public consciousness only two-and-half years ago, with the launch of Chat GPT. And although we’ve moved on from the novelty of requesting AI-generated images of kittens on surfboards, we are still some way off from the wholesale redundancy of entire industries, irrespective of Jeremy Hunt’s warnings.
But the infiltration of AI into the workplace, the automation of routine tasks and the embedded connectivity of every aspect of our lives is the single most significant development of the past decade. Every week brings a new AI tool for business. The fourth industrial revolution is upon us, and it is revolving at a dizzying pace.
Although all new technology can be used for good or ill, and comes with caveats, the potential for AI to boost productivity and help develop novel processes in an innovative and technologically advanced nation such as Scotland is huge. So why are businesses not more upbeat about our prospects?
According to a survey published last week, fewer than a third of Scottish businesses expect to increase profitability during the next 12 months. It’s a jaw-dropping statistic. A whopping 68 per cent of Scottish businesses expect their profitability to stall or decrease in the next financial year.
Five years on from the start of the pandemic, the engine room of Scotland’s prosperity has ground to a halt. This is alarming, but with a Holyrood election scheduled for next year perhaps we can expect some new political thinking to reboot the economy.
By then, the SNP will have been in charge for 19 years. Its record on business and the economy is not glowing. Industries that once formed the backbone of Scotland’s prosperity, and of which we were justifiably proud, have fallen victim to a sinister political puritanism.
The oil and gas industry, once touted as the money pit for independence — remember when we were going to have our own sovereign oil fund? — is now a pariah industry. So far from grace has it fallen that in an age of energy shortages and concern about security of supply, foreign-owned renewables and imported fossil fuels are favoured over an indigenous sector that contributes 5 per cent of Scottish GDP and supports 200,000 jobs in the UK.
At its peak, UK North Sea oil production topped 128 million tonnes a year. We are now a net importer of crude oil, with our decline the largest of any oil-exporting nation in the world. Last year we imported almost 50 million tonnes — much of it from the US where the threat of tariffs is about to expose our weakness.
Instead, we invest capital in renewables businesses, which are owned by overseas corporations that add little to our economy. Meanwhile domestic-domiciled businesses struggle and at the heart of our communities are boarded-up town centres.
Whisky, tourism, hospitality and property-based businesses in Scotland have all faced the new industrial puritanism that has disadvantaged them in recent years.
However, the daddy of all business policy fiascos is the ferry shambles, which left Scotland’s islanders without adequate transport links to the mainland for years. The SNP government was responsible for every element of that mess.
• The state is not functioning as it should — and we pay the price
Taxation in Scotland is higher and more complex than any other part of the UK. This puts Scottish employers at a disadvantage, particularly in relation to recruiting skilled workers. But public services are no better than in England and in many cases they are worse.
Three months ago Stephen Boyle, the auditor-general for Scotland, said there was no longer-term financial planning in Scotland and no transparency.
Yet, despite it all, Scottish business leaders believe that the SNP is the party that “best represents the interests of Scottish business”, according to last week’s Understanding Business survey. Some 28 per cent of Scottish businesses put the SNP as first choice, with 26 per cent backing Labour. The Scottish Conservatives were on 15 per cent and Reform on 9 per cent.
These are the same Scottish businesses of which two thirds do not expect their profitability to rise. Hold on to that thought for a minute.
The private sector, after 15 years of decline and complete misdirection to the point that the majority now believe their profits (and with it a large part of the tax base) will decline or stagnate, believes the architects of this disaster are the best hope the Scottish economy has for the foreseeable future.
It is a damning indictment of the malaise afflicting Scottish politics. Anas Sarwar, the Labour leader, has business meetings aplenty but even assuming he can cut through with the Scottish electorate, he is constrained by Labour’s policies at Westminster.
• The SNP has put us on a path to economic catastrophe
The increase in national insurance contributions and the workers’ rights legislation currently under consideration will have a detrimental effect on Scottish businesses.
Policies that might be expected to help boost the economy — such as changes to the planning rules and Angela Rayner’s housebuilding boom — will not, as they are devolved matters. The Scottish government has total control over planning, policy and decision-making in these areas.
As for the Scottish Conservatives, they have lost any economic credibility they once had. The calibre of senior politicians in the party is at an all-time low.
At a time when technology has the power to revitalise productivity and overcome many of the constraints of geographical remoteness, at a time of massive potential economic opportunity, businesses that have already been pared to the core are backing a fiscally incompetent government because they believe there is nothing better.
Sadly, they might be right. But even if we all quit and retrain as plumbers we are unlikely to be able to plug the giant sinkhole which is about to open up in Scotland’s economy.
