Brett Dury Architectural Photography image supplied by Intergraph
Invest in UK national security and resilience industry
In a poorly reported speech at the last Farnborough Air Show, Smiths Detection's managing director, Stephen Phipson, said he believed a 'triple bottom line' could be generated from investing in a National Security & Resilience industry
Mr Phipson welcomed the 'encouraging comments' made recently by the UK's coalition government on the need to re-invigorate international trade through a 'messianic' diplomatic offensive.
According to Mr Phipson, Smiths Detection generates 90 per cent of its profits from sales to overseas markets. So he was extremely encouraged by the new government's intention to help exporters with greater diplomatic and foreign policy support. He believed a series of national benefits can be generated from investing in a National Security & Resilience industry: what he termed the 'triple bottom line'.
Firstly, it supports both the diversification and expansion of the UK economy as the sector is forecast to grow significantly in the next decade.
Secondly, growth will directly enhance the provision of specialist capability giving HMG greater strategic capacity to respond to threats and risk
Thirdly, it offers potential efficiencies and cost savings to support strained public finances.
Mr Phipson went on to say: "NS&R is one of few industrial sectors continuing to grow through the global recession, albeit at a slower rate. It is a market underpinned by continuous demand.
"The constant presence of disruptive threats to society and economies – terrorist inspired and natural - creates Government and institutional demand for preventive and protective security capability.
"A further positive driver is the trend to automated equipment replacing costly and sometimes less efficient human capability. Analysis shows that Government expenditure on domestic or homeland security around the world is consistently in the same core areas of 1) border, port and aviation security, 2) cyber security, 3) CBRNE detection, 4) CNI protection and resilience and 5) combating improvised explosives.
"Goldman Sachs estimates the global market to be currently worth about $140bn and believes it could grow to some $254bn. So the case for investment is clear."
Mr Phipson claimed the UK's industrial strength in national security and resilience markets is built on a set of unique drivers: elite universities with scientific and engineering credentials; large defence and security industries; a history of combating domestic terrorism threats; a world leading counter-terrorism policy; a foreign policy and international reputation that supports co-operation with international Governments in combating threats.
Consequently, the UK has earned a reputation for security technology expertise and leadership.
However, with global competition increasing from countries investing in their domestic markets it is a source of concern that the UK is thought to be investing only £150mn on R&D in this sector
Due to higher risk, Government's are regulating for specific needs therefore shaping the market for more highly specialised and advanced equipment. Encouragingly, the UK has a large footprint in these high-end, advanced technology markets and it is this sector that offers the most attractive economic growth prospects
Mr Phipson said: "I believe the UK could become the number two player in the global NS&R market by 2015. How do we fulfil this potential?
"1. Create a coherent and competitive domestic market
This will incentivise British security companies to increase capital investment, stimulate new research, test capability and be a crucible for innovation. To do so I propose:
• Greater UK government regulation in the Security industry. We need clearer standard setting in major technology areas as happens in the U.S. Regulatory frameworks provide industry clarity on the profile of future demand.
• Consolidating the improved 'Strategic Relationship' between the industrial base and Government (users and policymakers) that is emerging.
• Enhancing the 'Information Flow' by building on the 2009 S&T Strategy to create a transparent capability framework where Government determines capability requirements over a cycle, based on priority threats across all hazards and communicates "need" regularly with the supply chain.
• Creation of a joint 'R&D Roadmap' by combining the issues of long-term investment and tomorrow's capability requirements.
• Providing greater transparency around the annual NS&R budget setting out clear expenditure allocations that will help to inform industrial investment decisions.
• Publishing a list of 'Indigenous Capability' that Government decides is essential to national security and resilience policy so that the supply base can respond.
• Temporary taxation incentives and relief on strategically important capability areas that require long term private sector investment.
• More flexible arrangements of ownership and licensing of Government owned science to support manufacture and deployment.
Without the foundation of a vibrant, coherent domestic market I feel it will not be possible to compete internationally in increasingly competitive export markets.
2. Prioritising an Export agenda –
Our ambition is to accelerate the development of UK industrial capability to achieve leadership positions in international NS&R markets such as the US, Brazil, India and Central Europe. I propose:
• Re-energising the tradition of Ministerial Advocacy by increasing the level of targeted overseas promotion of UK NS&R capability through ministerial trade missions and Government to Government discourse with our 10 largest trading partners
• Developing a UK Government endorsement (badge of approval) for proven, high level technologies which is of significant help for new business development in export markets.
• Customer Advocacy whereby without acting as advertising agencies UK Government departments and services using British capability should be able to play a role in endorsing British technology to international Government users.
• Greater support at the international regulatory level, particularly with the European Commission which has increased authority on regulating counter-terrorism and security systems.
• More support for UKTI and DSO in particular in tracking and sharing the latest market insights and intelligence on the customer agenda, procurement opportunities and spending programmes.
• Foreign Government advisory and contact-building capability
• Overseas media and marketing campaign in line with the UKTI marketing strategy for the security sector.
• Faster export approval process.
As traditional sectors in the UK and global economy struggle in the recession, now is the time to exploit the UK's strength in the emerging market of national security and resilience.
We have multiple world leading capabilities in the Defence and Security space. In summary, a truly competitive NS&R industrial base in the UK would enhance national security and employment prospects at a time when both are under threat."
Smiths Detection's managing director, Stephen Phipson, who is also Vice President of Security for ADS
