VCM0026

Written evidence submitted by NCC Group

 

 

NCC Group is delighted to have the opportunity to engage with the Treasury Committee’s important inquiry.

 

As a UK-headquartered FTSE250 cyber and software resilience business, we are proud to be an active member of the British tech ecosystem, investing in research and solutions to some of the most pressing challenges and opportunities facing the digital world – from ransomware and home device security to the internet of things and quantum technologies. Understanding emerging technologies and their interdependencies, and how they can be misused and abused for malign purposes, is fundamental to our continued operations, and a central underpinning to our mission to make the world safer and more secure. We work with partners across academia, the public sector and private sector, from global tech firms to SMEs to answer these questions and develop innovative solutions. We also support the UK’s start-up ecosystem through partnerships with Ashurst Fintech Legal Labs and FinTech Scotland, where we share our specialist cyber security knowledge by identifying, feeding back on and inputting into prospective start-up and scale-up businesses operating in technology and financial services.

 

Drawing on this experience, we are keen to support the Committee, in particular, by offering our view on the ways in which the UK venture capital market, and the policy and regulatory frameworks that underpin it, could be strengthened in pursuit of the UK Government’s aims to be a global science superpower. To this end, we do believe there are synergies between the Committee’s inquiry and that currently being undertaken by the Lords Science and Technology Committee into a ‘UK science and technology strategy’.

 

Clarity of mission

 

The Government’s ambition to be a “science superpower” is well-known, not least because it has been reiterated across various publications, and publicised in social media friendly imagery and straplines; however, what is not clear is what this means in practice or how the UK will achieve this vision. The variety of (often inconsistent) strategies and economic priorities creates a complex web of messages for the UK’s VCs and broader investment community to understand and navigate. The consequence is that the UK’s venture capital ecosystem is often fragmented and pulling the UK’s (limited) resources in different directions. To combat this, the Government should, as a priority, set out a clearly articulated national mission that establishes:

 

 

Clarity of mission will better enable VCs and other investment arms across the private sector, public sector and academia to align their activities, pooling their resources to drive towards a centrally agreed goal. In doing so, the Government should also align its horizon-scanning capabilities to these priorities to ensure there is sufficient capacity and ecosystem support now and through to the delivery of its 2030 goals.

 

Whilst our response focuses on achieving the Government’s aims to be a “science superpower”, we do believe that this approach should be applicable across the other strategic goals identified by the Committee including levelling up and net zero (notwithstanding that these aims are intertwined).

 

Utilising government levers to create an attractive investment landscape

 

The Government should use its own investment capabilities to proactively invest and facilitate investment in the (aforementioned) priority sectors, preparing the UK to capitalise on the next wave of technological innovations. Specifically, we propose a two-fold approach:

 

a)      Utilising the newly established Advanced Research and Invention Agency’s (ARIA) to enact ‘grand challenges’ for early-stage problems and strategic areas of interest. The UK is often limited in part by ‘British ambition’ (or perhaps more accurately, a lack thereof), unwillingness to take risk or perception to have not succeeded. We would encourage a review of the reflections from the US Congress’ recent hearing on "China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States"[2]. There are various lessons which China has learnt from the West’s approach to science and technology and then subsequently improved. This includes the Grand Challenge approach pioneered by the Defense Advanced Research Projects Agency (DARPA) which China has taken and continues to use due to their efficacy despite the US not continuing the model. (There are lessons to be learned, too, from this in relation to the UK’s ARIA.)

 

b)      Establishing a sovereign fund and/or utilising the British Business Bank infrastructure to develop a risk-balanced portfolio of scale-up and industrialisation opportunities. In practice, this would involve investment in a large volume of lower risk bets, with small number of higher risk investments.

 

The Government should also ensure that its regulatory regime, whilst promoting ‘security by design’, creates minimal barriers to early adoption of new (priority) technologies like quantum – particularly in critical strategic sectors such as the military, national security, policing, healthcare, telecommunications, financial services and manufacturing. By doing so, the UK’s emerging tech sectors will be able validate their solutions at pace, build an evidence base of value, and gain any productivity and capability benefits, whilst demonstrating to the world the value of UK innovation and the agile innovation environment contained within. Failure to do so could see stalled adoption, as we have seen – for example – in the financial services where regulatory complexity has hindered the adoption of cloud.

 

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VCM0026

Annex: A comparison of UK strategic technology and sector priorities, as set out in recently published Government communications and policy papers

 

 

UK Innovation Strategy[3]

Jul 2021

Integrated Review[4]

Mar 2021

Levelling Up White Paper[5]

Feb 2022

Build Back Better[6]

Mar 2021

Spending Review[7]

Oct 2021

National Security & Investment Act[8]

Jan 2022

UKRI Strategic Priorities Fund[9]

 

Institutes of Technology[10]

Advanced Materials and Manufacturing

X

 

X

 

 

X

 

X

Aerospace

 

 

X

 

X

 

 

 

Agritech

 

 

 

 

 

 

 

X

AI, Data, Digital and Advanced Computing

X

 

X

X

X

X

X

X

Automotive

 

 

X

 

 

 

 

 

Bioinformatics and Genomics

X

 

 

 

 

 

 

 

Ceramics

 

 

X

 

 

 

 

 

Chemicals

 

 

X

 

 

 

 

 

Civil nuclear

 

 

X

 

 

X

 

 

Communications

 

 

 

 

 

X

 

 

Creative industries

 

 

 

X

 

 

 

 

Cryptographic Authentication

 

 

 

 

 

X

 

 

Cyber

 

X

X

 

 

 

 

X

Defence and military

 

X

 

X

 

X

 

 

Engineering Biology

X

X

 

 

 

X

 

 

Electronics, Photonics and Quantum

X

X

 

 

X

X

 

 

Energy and Environment Technologies

X

 

X

X

 

X

X

X

Fintech

 

 

X

X

 

 

 

 

Infrastructure and transport

 

 

 

 

 

X

X

X

Life sciences

 

 

X

X

 

 

X

X

Marine

 

 

X

 

 

 

 

 

Medtech

 

 

X

 

 

 

X

 

Oil and gas

 

 

X

 

 

 

 

 

Productivity

 

 

 

 

 

 

X

 

Robotics and Smart Machines

X

 

 

 

 

X

 

 

Space

 

X

X

 

X

X

 

 

June 2022

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[1] In our response to the Lords Science and Technology Committee’s ongoing inquiry, we set (on page 2) the ways in which we believe the UK as a “science superpower” can be measured: https://committees.parliament.uk/writtenevidence/107373/pdf/

 

[2] China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States | U.S.- CHINA | ECONOMIC and SECURITY REVIEW COMMISSION (uscc.gov)

[3] Seven technology families of UK strength and opportunity: UK innovation strategy (publishing.service.gov.uk)

[4] Based on R&D investment priorities: Global Britain in a competitive age (publishing.service.gov.uk)

[5] Based on regional economic clusters: Levelling Up the United Kingdom - GOV.UK (www.gov.uk)

[6] Based on the technologies and sectors identified for support: Build Back Better - our plan for growth (publishing.service.gov.uk)

[7] Based on R&D funding priorities: Autumn Budget and Spending Review 2021: A Stronger Economy for the British People (publishing.service.gov.uk)

[8] 17 sensitive areas of the economy: National Security and Investment Act: guidance on notifiable acquisitions - GOV.UK (www.gov.uk)

[9] 8 priority themes: Strategic Priorities Fund – UKRI

[10] Skills specialism across Institutes for Technology: Institutes of Technology - GOV.UK (www.gov.uk)