Distributed Ledger Technologies in Public Services

3. Digital Strategy, DLT in Context

3.1 The Scottish Government's Digital Strategy

In March 2017, The Scottish Government published a refreshed Digital Strategy (Scottish Government, 2017) which set out a vision for Scotland as a "vibrant digital nation which could realise its full potential in a digital world".

The strategy identified a policy of continuous innovation and improvement of public services, through a collaborative approach to new technologies which delivers joint action plans across local, central government, health and the 3rd sector.

Blockchain was identified as one such new enabling technology which would be explored in this way, with a further commitment to share ideas and experiences with international governments.

In keeping with this commitment in the Digital Strategy, this report and its supporting research have been completed with cross-government collaboration.

3.2 Report Scope and Deliverables

The agreed specific deliverables and scope of this report were:

• Establishing the benefits and applicable use cases for DLT technology in Public Services generally and in Scotland specifically.
• Establishing current thinking for the use of DLT in public services across international governments.
• Engagement of Scottish Government sponsors and identification of candidate use cases for DLT implementation, and the scope of those use cases across central & local government and health.
• Identification of potential private sector industry input and collaborations.
• Recommended action plans.

This report includes a simplified view of the subset of DLT that are blockchain based trading cryptocurrencies. It presents the context in which DLT may become a useful enteprise technology for solving government and citizen problems, and where it presents opportunity in economic development.

It does not attempt to offer the reader a detailed understanding of the coin economy and its trading of Bitcoin, Ethereum, etc. It does not attempt to cover innovation in the Financial Services sector and related innovations in the financial regulatory environment which have come from DLT/blockchain, though it does touch on the Initial CryptoAsset Offering phenomenon.

3.3 Why DLT?

DLT is useful for digital data governance and the exchange of value, or valuable information around public networks like the internet.

In the public sector, such value resides in title deeds, records of life events, licences (to operate taxis, pubs and nurseries), childcare vouchers, parking permits, educational qualifications, and votes.

DLT can automate, reduce transaction costs, increase accountability, and enable markets for these valuable assets and data. This has the potential to transform delivery of digital public services to citizens.

The evolution of DLT can be traced over several decades, with accelerated growth in the last 10 years, and significant activity in public services since 2015. UK Government Chief Scientist, Sir Mark Walport, initiated discussion on this topic in his January 2016 report (Walport, 2015) which set out how DLT could transform the delivery of public services, boost productivity, and reduce costs:

"It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust".

More recently, the House of Lords issued a report: Distributed Ledger Technologies for Public Good: leadership, collaboration and innovation (Richmond, 2017) with a forward by Lord Holmes of Richmond, in which he stated:

"With the right mix of leadership, collaboration and sound governance, DLT offers a step change for service delivery in both the public and private sectors. By reducing data fragmentation and enhancing traceability and accountability, DLT promises cost-savings and efficiencies on a scale sufficient to impact national finances."

DLT offers governments a means to better empower citizens while reducing the cost and improving the quality of the state's provision of services.

A significant and growing number of governments recognise this potential and have embarked on pilot projects to demonstrate reduced cost, improved governance and online safety, and streamlined citizen experiences.

Our research shows that international governments are taking leading roles in realising this opportunity^[1] and that although DLT's rapid evolution presents risks and issues still to be addressed, valuable live use cases have now emerged.

With national focus and leadership leveraging its tech, cyber and academic assets, Scotland could join the forefront of this international community^[2]. The report's overwhelming recommendation is that Scotland quickly adopts international best practice by developing a vision and commissioning a co-ordinated practical action-oriented plan.

In the context of the Scottish Government digital strategy, a cross-government plan for DLT is recommended to realise its full benefits for future digital public services. Specifically, public sector "pilot" activity is recommended below based on input of Scotland's Public Services and industry leaders, with evidence from global industry insights^[3].

Outside focussed scope of DLT in digital public services, this report signposts to its role in the wider context of Scotland's economic development; DLT may represent the future of how citizens, consumers and industries interact in a transparent, secure and streamlined manner to form the highest performing economies.