Brexit: Assessing the Impact on the UK’s Security Industry

After four years of negotiations, delays and a 12-month transition period, questions still remained. How would this historic decision impact the defence and security industries, from new complexities in the supply chain through to questions surrounding cross-border trade?

Despite the changing status of the UK’s position within the EU, export statistics from UK Defence and Security Exports (UKDSE) – an agency of the Department for International Trade – reveal just how important the European market really is. That market was responsible for 20% of total defence exports in 2019 (up from 9% in 2018). Europe also continues to be the largest exports market for the UK’s security industry, racking up £2.59 billion in sales in 2019.

Speaking about Brexit, Nathan Mathiot (senior policy advisor on security and resilience at the ADS Group) commenyed: “The eventual ratification of the UK-EU Trade and Co-operation Agreement by the European Parliament in April marked a new moment in the future of the UK’s relationship with the EU, but it also acted as a reminder that the consequences of the UK’s departure from the EU will continue to have an impact on the UK’s security and resilience sector for years to come.”

Mathiot cites collaboration and the importance of working together as fundamental steps to an ongoing harmonious relationship with the EU. “It will be crucial for the UK and EU authorities to work closely together on mitigating the effects of new trading barriers. The ADS Group is already engaging with Government via forums such as the Security Exports Steering Group to help resolve specific issues.”

Business in the post-Brexit era

Understanding new trading agreements proved to be the most immediate challenge for security and defence sector professionals. Trade volumes were reported to have dipped significantly at the start of the year, with a slight recovery then witnessed as companies and traders became more familiar with new customs and trading arrangements.

Mathiot highlights the efforts by the UKDSE to support the UK’s defence and security industries through an enhanced ‘Team UK’ approach that uses Government-to-Government commercial mechanisms to help land export deals. This is a move that the ADS Group supports through the Security and Resilience Growth Partnership.

Mathiot explained: “As the world’s third largest exporter of security goods and services [according to UKDSE statistics from 2019], the UK’s drive to sign comprehensive trade deals with the USA, Australia, India and New Zealand could herald opportunities for UK security companies to export their cutting-edge capabilities more widely. Nonetheless, this again must come with the health warning that, for the foreseeable future, Europe is likely to remain the UK’s largest security export market. The picture there remains cloudy.”

With international opportunities on the horizon, some companies are already experiencing an increase in business outside of the EU. With a unique perspective on Brexit as the managing director of a UK company living in Brussels, Adam Liardet of body-worn video (BWV) technology specialist Audax has suggested that, despite Brexit, UK-manufactured products continue to be in demand – and even more so – outside of Europe.

Liardet explained to Security Matters: “We’re currently exporting huge amounts of product outside of the UK, with notable success in European countries like France. I believe there are now more opportunities for UK companies.” The business has garnered interest from around the world with that interest spanning Eastern Europe, France and Mediterranean and Scandinavian countries through to those in South East Asia, Africa and South America.

Illustrating his point, the company recently announced that its BWV technology has been adopted by the Vietnamese authorities, with 1,350 cameras shipped to the police service in Vietnam earlier this year. Speaking about that contract, Liardet added: “We’ve shipped nearly 8,000 cameras to Vietnam in the last two years. As a result of this, and our other customers recognising our ‘Made in Britain’ quality, we have not only avoided furloughing any staff, but even recruited new staff members to the team this year. Further, demand is so strong that we’ve had to double our floor space in Plymouth.”

Different way of working

Despite some “administrative hostility” from EU companies, Liardet believes there have been little-to-no notable changes in the security industry. However, he believes the industry is now “working in a different way, but achieving the same result”. He cites the additional administration and paperwork as the biggest hurdle facing businesses trading within the EU.

Liardet also believes that SMEs may be more equipped to adapt to this fast-changing context compared to larger businesses. He suggests that bigger companies are less likely to take risks, whereas SMEs and smaller companies “are often more willing to embrace change” and be more agile.

Nathan Mathiot highlights the fact that, alongside addressing a range of trade issues, the UK-EU Trade and Co-operation Agreement also outlines a new framework for law enforcement and judicial co-operation in criminal and civil law matters.

“While this positively sets out a framework for co-operation between the UK’s and the EU’s law enforcement and judicial authorities, for example, to continue to share data such as DNA, fingerprints and Passenger Name Records, it provides little in the way of structures for industrial co-operation in security. Additionally, while the agreement commits to regular dialogue on cyber security and cyber crime and puts in place a structure for enabling the voluntary sharing of classified information, there’s a disappointing lack of an industrial dimension.”

Mathiot provides some reassurance for the UK’s security and resilience sector, highlighting the UK’s decision to associate with the Horizon Europe programme, which itself will have a budget of approximately €95.6 billion for 2021-2027. This will enable UK businesses and researchers to access funding under the programme on equivalent terms as those organisations resident in EU countries. Of particular interest to UK security companies is Cluster 3, Civil Security for Society, which covers areas such as counter-terrorism, border security, CBRN protection and cyber security.

It helps to ensure that UK and EU companies can continue to access procurement opportunities issued by either side, for example by law enforcement agencies in Europe. Mathiot points out that the ADS Group is working closely with bodies such as Innovate UK to help companies access these new funding opportunities. It’s Mathiot’s view that only time will tell if UK security companies can achieve the same success as they did previously in tendering for business with EU contracting authorities or in applying for EU research and innovation funding.

Protecting long-standing intelligence ties

While businesses adapt to the new rules and regulations surrounding investment and the import and export of physical goods, concerns have been raised over the status of long-standing intelligence ties between the UK and its EU counterparts. How will intelligence co-operation continue in the post-Brexit era? In the period leading up to Brexit, the uncertain status of policing tools such as the Schengen Information System (SIS II) and the European Arrest Warrant (EAW) saw UK policing bodies critically evaluate and identify contingency measures that would mitigate any potential loss of capability.

While reports suggest that Britain has lost ‘significant’ access to EU policing data under the Brexit deal, statements from the Home Office have instilled confidence that UK law enforcement bodies will still receive access to the data they need, with the number of red notices coming through Interpol said to be broadly the same as that previously received through SIS II.

Speaking at International Security Week, Ian Dyson (Commissioner of the City of London Police) highlighted the role of intelligence sharing and its importance in policing in a post-Brexit environment. He acknowledged the loss of the EAW, but also reminded attendees that “there will still be the ability to work with our European colleagues.”

Dyson continued to explain that, even if we did leave the EU with no deal, it isn’t going to mean there’s suddenly a haven for criminals who commit crimes in the UK and then head to Europe in the belief they cannot be touched. “It’s absolute nonsense,” said Dyson, “and particularly so given the sort of connected world in which we now reside.”

Further, Dyson highlighted that the City of London Police has always had an international outlook. Reaching across international boundaries has long been part of its DNA. As a specialist police force, the City of London Police has taken on expanding responsibilities within national policing for cyber crime. The City of London is “at the very heart of policing in the 21st Century”.

He suggested that, while there may now be more traditional judicial extradition processes, which would be more timely and expensive, the end result is still achievable. The industry is required to think about them in a different way.

Beyond Brexit to the future in the ‘new normal’

While Britain’s exit from the EU is now a reality rather than a distant vision, many security professionals were well prepared for the inevitable changes that occurred as a result. While many companies are still struggling with the increased costs and subtleties of enhanced regulatory and compliance-focused requirements, the continued collaboration and opportunity for growth remains.

Nathan Mathiot concluded: “As we look forward to the future, there are many opportunities for UK security companies as the scope of national security and resilience itself widens in the aftermath of the pandemic. With biosecurity, viral protection and diagnostic capabilities now assuming an increasing importance, and with the dramatic growth in home working helping to strengthen the importance of cyber security, the UK’s security and resilience sector will be well-placed to contribute to our nation’s economic recovery and also respond to new security challenges.”

In conclusion, Mariot said: “The UK’s Integrated Review and Defence and Security Industrial Strategy herald a new strategic and collaborative approach between Government and industry. The ADS Group is working closely with the Home Office’s Joint Security and Resilience Centre to ensure this approach, and the many policy recommendations underpinning it, are implemented quickly such that the UK’s security and resilience sector can continue its upwards trajectory as the country finds its new place in the world.”

*Returning to London’s Olympia on 28-29 September, International Security Expo will, for the first time, be co-located with the all-new International Cyber Expo, helping to bridge the gap between the physical and cyber security industries. Further information is available online at https://www.internationalsecurityexpo.com/