Government’s security budget cuts offset by industry innovation

Speech to Counter Terrorism & Security conference highlights industry role in national protection

A|D|S, the UK’s AeroSpace, Defence and Security trade organisation today (Wednesday) seeks to highlight the role that the security industry can play in protecting the UK, its economy and its population despite the difficult financial climate faced by the Government and the resulting fall in overall security budgets.

Following speeches earlier in the year on the impact of the recession on the security industry Hugo Rosemont, Security Policy Adviser at A|D|S, provides an early security industry reaction to the “wider security” aspects of the Spending Review and the Government’s latest strategic security announcements.

Rosemont will address the conference at 0930 today alongside senior security officials from the European Commission and the UK Government before appearing on a panel on aviation security later in the day.  Among the subjects he will cover are:

  • The Government’s recently published suite of strategic security documents – the National Security Strategy (NSS) and the Strategic Defence and Security Review (SDSR) – and the Comprehensive Spending Review (CSR) demonstrated that national security budgets are not exempt from the pressures associated with the Coalition’s overall priority of deficit reduction. The budgets of the Ministry of Defence and the Home Office in particular – both of which contribute to the delivery of the UK’s counter-terrorism strategy, CONTEST – were subject to significant overall reductions (7.5 per cent and 23 per cent respectively) by the Spending Review. The Government has declined to “ring fence” national security expenditure.
  • There are differing views in the security industry around the long-term impacts of the 2010 Spending Review on the UK’s defence and security capabilities, and industry itself. What is clearer is that both the Ministry of Defence and the Home Office have been tasked to make substantial budgetary reductions. On the domestic security agenda, for example, the 14 per cent reduction to the Home Office’s contribution to UK policing is significant, as are the potential impacts on the private sector supply chain which supports the service.
  • However, the overall figure of a “23 per cent cut” to the Home Office’s overall expenditure does not tell the full story. On the most important issue within the department’s portfolio, counter-terrorism, the Spending Review announced a minimal reduction of ten per cent (over four years) to Government spending. To help tackle this “tier one” security risk there is a renewed emphasis towards the development of appropriate counter-terrorism policies and measures in the SDSR. The Spending Review which underpins it makes clear that counter-terrorism must be supported by significant investment. The Government’s decision to continue to prioritise and invest in the counter-terrorism elements of policing is encouraging. Furthermore, the importance of the single intelligence account has been recognised. The intelligence agencies will be able to continue to invest in counter-terrorism capabilities.
  • The latest Government documents have also announced that there will be new areas of public sector investment in many vital areas of security. It is clear that there is now a major focus arising from the SDSR and the CSR on the UK’s strategy for cyber security and information assurance. This includes a greater allocation of public resources (£650million over four years) to the security of this domain which may offer some opportunities for the security sector.
  • Overall, the inclusion of “wider security” elements in the SDSR is likely to present the UK-based security industry with new opportunities to work even more closely with Government on national security issues, and to fulfil its economic potential.

Against this backdrop it is anticipated that the Government’s latest security and budgetary announcements will impact the security industry in the following ways:

  • The latest documents suggest that there will be many new opportunities for Government and industry to work together in different sub-sectors of the national security and resilience market. The UK’s new national posture includes “wider security” issues such as international terrorism, cyber security, border security, UK resilience, serious organised crime and energy security. The security industry has contributions to make in meeting many of these security challenges.
  • Policing cuts are likely to have an impact on the policing supply chain. This needs to be managed carefully, especially regarding how the SME community can continue to support the police service.
  • The 10 per cent cut to the UK’s counter-terrorism budget means that the impact on the high-tech sector of the security industry is likely to be minimal and that the industry will be able to continue to focus some of its investment towards supporting CONTEST.
  • There is some concern in parts of the UK security industry that the levels of public sector funding towards research and development for security purposes are unclear. Industry believes that it is vital that the latest announcements do not undermine sensible levels of investment towards these ends.  The National Security Council has an important role to play in this area.
  • Whilst some areas of domestic security expenditure are flattening or reducing there is a huge opportunity for Government and industry to develop a major focus on security exports, as the SDSR rightly identifies, to generate economic growth and influence overseas security arrangements. There is also a major opportunity for Government and industry to work together more closely to promote (and develop) new capabilities in the context of the intention to create stronger bilateral relations between the UK and both the US and France on security and counter-terrorism issues.

Rosemont also identifies some of the ways that the financial landscape following the Spending Review may pose some risks to the delivery of security measures:

  • As recognised in the 2009 iteration of CONTEST, there is a risk that it will become more difficult to encourage continued investment by industry (operational and supply) in security measures. This risk can be mitigated by delivering greater transparency around security requirements and the public resources that will be allocated to national security;
  • There is a risk that overall budgetary pressures may impact upon the levels of public funding allocated towards science and technology for security purposes. The importance of sensible funding levels of funding towards the research and development activities of the HOSDB, OSCT, TRANSEC, DSTL can not be underestimated;
  • The pressures on the FCO and UKTI budgets pose risks for the successful implementation of the Government’s new and welcome focus on commercial diplomacy, which includes security exports. The development of a close relationship between Government and the security industry can mitigate this risk significantly.

He concludes with a positive overall assessment of the inclusion of wider security elements within the SDSR and the opportunities they present.  The UK needs an even more effective security industry and the state of the economy has significant impacts on security and counter-terrorism. However, if Government and industry work together in the right ways the economic situation also presents some very attractive opportunities relating to the security agenda, including:

  • To develop strategic and systematic engagement between the UK police service and the security industry, especially on procurement issues
  • To develop industrial policy – across both defence and security issues through the Defence and Security Industrial Technology Policy (DSITP) – to ensure that industry can contribute to national security objectives more effectively
  • To fulfil the economic contribution of the UK security industry, including by increasing the UK’s share of the global security market through exports.

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