Home News “Stimulate private investment to sustain critical security and intelligence R&D” urges RUSI

“Stimulate private investment to sustain critical security and intelligence R&D” urges RUSI

by Brian Sims
RUSI's headquarters in London's Whitehall

RUSI’s headquarters in London’s Whitehall

Ahead of a Strategic Defence and Security Review due to take place later on this year, the Royal United Services Institute for Defence and Security Studies (RUSI) report entitled The Future of Research and Development in the UK’s Security and Intelligence Sector explores the UK’s research and development (R&D) roadmap to 2020, duly identifying a series of recommendations for the British Government and stakeholders across the security and intelligence community. In a complex threat environment and with budgetary pressures ongoing, RUSI recommends increasing market confidence to attract new private investment in security and intelligence R&D.

In recent years, states the Whitehall-based Think Tank, UK Government spending on R&D in security and defence has fallen faster than in any other area. At the same time, the Security Service and intelligence agencies face an ever-more diverse range of technically competent adversaries and yet have less control than ever before over the development of new technologies.

RUSI believes that the Government and the intelligence community should articulate requirements and procurement policy more effectively in order to improve investor confidence and, ultimately, help the industry.

The report has been written by Charlie Edwards, director of the National Security and Resilience Studies Group at RUSI, and Calum Jeffray (the same group’s research Fellow). This comprehensive document suggests that there’s “a widespread belief that current levels of funding for R&D activities in this sector are insufficient… This is problematic in the area of national security where operational priorities often necessitate innovation that’s fast and responsive to the needs of the security and intelligence agencies without disproportionate financial burden.”

While R&D spending is the most-cited metric of innovation in an economy, overall public and private sector investment on R&D in the UK has been in steady decline since the 1980s.

“Investment in R&D in the UK has continued to fall over the last 30 years,” explained Charlie Edwards. “In 2012, which is where you’ll find the most recent figures, R&D amounted to 1.72% of UK GDP which was lower than the 2.06% average for the EU and far short of the Government’s target to have increased UK R&D investment to 2.5% of GDP by last year.”

Edwards continued: “The British Government’s National Security Strategy identifies technology as a key driver when it comes to combating many of the threats facing the UK. It emphasises that, in the future, both state and non-state actors will have access to a greater range of technologies which can be used both to protect and also attack national security. Recent Government reports describe threats that emanate from both sophisticated military weapons and the greater innovative and ingenious application of readily-available civil technologies. A Defence White Paper suggested that ‘adversaries can more easily buy high technology products on the open market, [which] potentially reduces our operational advantages.’”

Keeping pace with technology developments

The RUSI report’s authors conducted a number of interviews across Government and industry as part of the research.

Co-author Calum Jeffray explained: “Coupled with declining R&D spend, many of those people we spoke to were equally concerned by a commensurate decline in the ability of the security and intelligence agencies to keep pace with the rapid development of new technologies, driven by consumer demand and exploited by increasingly sophisticated adversaries. The UK has a flourishing private technology sector, yet many start-up companies and SMEs continue to find it difficult to secure appropriate funding and support from investors in order to develop their concepts into capabilities.”

While the Government and its agencies have recently taken notable steps to increase their level of transparency and open up the market to a broader range of young and technically adept SMEs, RUSI believes that significant obstacles remain when it comes to linking Government requirements for national security with innovation and emerging capabilities across the private sector.

RUSI states: “R&D in security and intelligence capabilities suffers from a number of market failures, including the inherent tension between a fast-moving technology market and a slow-moving Government bureaucracy, not to mention the secret and sensitive nature of the work of the Security Service and the intelligence agencies. As a result, industry is often unable to communicate with its end users, ascertain their capabilities and requirements or focus its R&D efforts appropriately.”

To help address these significant challenges in sustaining technological advantage, the RUSI report explores ways in which to improve engagement between Government, private investors and industry operating in this sector in order to ensure that R&D investment is strengthened, priority capabilities are understood by investors and that all critical capabilities are sustained.

Key recommendations in the report

The RUSI report identifies a series of key recommendations. They are as follows:

*Government needs to attract private investors to this sector by increasing market confidence

The absence of private investors hinders the sector’s ability to sustain high levels of R&D funding within the ecosystem

*Articulate requirements and make-buy policy more effectively

Clearer indications from the Government on technology policy, strategy and procurement would improve investor confidence and help industry to better allocate its R&D resources in priority areas

*Investment for R&D in security and intelligence should be increased

There was widespread consensus among both public and private sector stakeholders interviewed that current levels of R&D investment are insufficient to ensure the development of long-term disruptive technology

*Break down the ‘culture of secrecy’

The ‘culture of secrecy’ is particularly problematic for investors who are unable to gauge market requirements and the ultimate return on their investments

*Open up the market and be flexible enough to make tactical investments

SMEs are deterred by the challenges of operating in a market that’s dominated by a small number of large companies and which they struggle to penetrate

*Download the new RUSI report at: https://www.rusi.org/publications/occasionalpapers/ref:O552EA5CB4F0F3/

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