Tag Archives: policy

The UK’s most important 21st century infrastructure project? Cybersecurity

I believe that the most important 21st century infrastructure project for the UK will be the development of world-class cyber-security.

So much of our national infrastructure is being digitalised that it is easy to lose track.

My sector, the energy industry, is in a massive state of change. The emerging “smart grid” scenario comprises connected renewable generation, storage, metering, and demand response. This deep level of decentralised control will yield enormous benefits for cost and sustainability. However, these will come at the price of potential vulnerability to cyber-criminals and attack from state/non-state actors. A hijack of our energy infrastructure would have catastrophic consequences for our economy, security, and general way of life.

This is not just a problem for the energy sector. Digitisation is sweeping through our industries at breakneck pace. The automation of vehicles, the proliferation of digitally connected appliances in the home and industry (the “Internet of Things”), digitisation of medical records, and even the cultivation of food in “vertical farms” means every aspect of life will be affected.

Improving the resilience of these assets must be of paramount importance. However, the rise of high-profile hacks of data and growing incidences of “ransomware” attacks show this is not translating into action.

Increasing cybersecurity literacy for all ages must be a priority for the government. Many people still use easily-hackable passwords and can be fooled by a simple phishing attack. Education must start at school and continue in the workplace, even at board level.

The 2017 ransomware attack on the NHS shows how crippling cybercrime can be for our institutions. The attack exploited a vulnerability which would not have been an issue if the IT infrastructure had been the latest available. Budget cuts at the NHS Trusts meant that they had de-prioritised IT upgrades and exposed themselves to cyber-risk.

The UK Government must make it clear to leadership at all critical organisations that IT security has to be priority #1 for all spending, with ring-fenced budgets. HM Government should set up a unit of “white hat” hackers that is responsible for penetration testing the Police, NHS, and other assets of national importance on a constant basis.

Our economic advantage as a nation arguably rests on our ability to innovate. Therefore it is also critical to help the private sector to protect itself against industrial espionage, which is often sponsored by nations with low respect for Intellectual Property rights.

The physical communications network underpinning the internet also needs to be protected. The vulnerability of our undersea cable connections to other countries to attack by hostile actors needs to be addressed, and the UK needs to have a strong presence in the Space sector to remain at the leading edge of innovations.

Developing the world’s best cybersecurity infrastructure will put the UK in pole position to capitalise on the opportunities of digitalisation while protecting itself against future threats. All other infrastructure will need to build on this platform, which is why I regard it as the most important.

Sale of Green Investment Bank

In my opinion, one of the great Liberal Democrat achievements of the Lib Dem/Conservative Coalition UK Government of 2010-2015 was the establishment of the Green Investment Bank (GIB).

The GIB was set up with UK public money to “back green projects on commercial terms and mobilise other private sector capital into the UK’s green economy”. It invests in a variety of green UK projects such as energy efficiency, waste/bioenergy, and offshore wind. By June 2017 it had invested into 99 projects, committing £3.4bn into the UK’s green economy (much of that from private co-investors).

As a Brit who is dedicated to greening the global economy, I was proud to see this excellent development and excited to think about the huge potential impact that it would have.

I envisaged a British version of KfW, the German Government-owned bank with over €489.1bn of total assets and annual revenues of over €74.1bn (in 2014). KfW has had a transformation impact on the German green economy and wider economy. It is 90% financed by the capital markets, issuing bonds that are guaranteed by the Federal Government (and therefore have an interest rate that is extremely low).

I was therefore shocked to hear that the Conservative government (2015-2017) had agreed on the £2.3bn sale of the GIB to Macquarie, an Australian infrastructure investment bank. Many have criticised the sale, saying it has been sold off on the cheap and that the bank will not stick to the green investment mantra after the obligatory 3 year period.

Apparently, the GIB chair was in favour of the sale as they believed it was important to get new investment to grow the bank’s impact and secure its long-term future. How true that is (or how much it is someone protecting their job/position) I can’t tell, but I can somewhat see the logic.

What I find odd is the fact that the GIB would surely be a key channel that the Government could use to deploy capital to support their flagship Industrial Strategy policy. This Strategy was formulated to stimulate technology and green businesses so that the UK economy is well positioned to grow and be globally competitive for years to come. Selling the GIB removes a crucial funding dispersal mechanism that could have addressed barriers to green economic development and buttressed the Government’s efforts.

Additionally, I would have thought that leaving the GIB in public hands would be ideal for the UK Government’s commitments under the Paris Agreement and the commitment to spend 0.7% of GDP on international aid. Having a bank focused on clean energy projects would have been an ideal channel to deploy capital into projects aligned with these commitments.

This year, there were rumours that the sale could be abandoned in favour of an IPO. That appeared to be the preferred option of the second favourite bidder, Sustainable Development Capital. Whether the recent election miscalculation of Theresa May has interfered with it remains to be seen.