The UK is right to build up its cyber-defences

Serious threats.

Last week’s announcement by Philip Hammond that the MoD is to recruit a large number of cyber-security specialists as reservists to tackle serious cyber-attacks, adds a welcome degree of clarity to the statement he made earlier this year, on the future of the armed forces reserves.  One of the Conservative party’s best-known peers, and former cabinet ministers, characterised last week’s announcement as "the most important announcement of the week" – however, the main task of the Joint Cyber Reserve Unit (JCRU) will not be, as he put it "to devise protection for our infrastructure."

The apocalyptic cyber-warfare vision of Hollywood action-thrillers is some distance from the reality, and the threat to our physical infrastructure is less than the threat posed by potential attacks on information infrastructure. The perception that foreign-based hackers could blow up a gas pipeline or poison the water supply is – at least for the moment – quite fanciful. Physical machinery such as power stations, electric substations, and water purification plants can be designed to operate independently of the internet – this makes them considerably easier to defend against to cyber-attacks. 

However, the same cannot be said for the stock-exchange, the bank clearing system, and enterprise payrolls, not to mention the huge slice of the economy which is exclusively online, from internet shopping to vehicle tax renewal.  A cyber-attack on such facilities would not result in the lights going out, but could cause widespread economic chaos.

Of course, in times of conflict, it is not just civilian assets that must be protected, and the JCRU will also be tasked with protecting the military’s digital and data capabilities. These are currently underdeveloped, but are set to form a more important part of the country’s overall defence capability in years to come. I was recently involved in the production of a report by the Royal United Services Institute, which explored the potential for data capture and analysis to boost the effectiveness of military capability.

The potential for such technologies to offer tactical and strategic advantage is huge, particularly in battlefield surveillance and reconnaissance. The UK’s intelligence services already collect many times more data on active military operations than it is currently possible to analyse, and rectifying that problem will call for sophisticated automated analysis. Often this uses multiple devices and networks, but the more resources that are used in analysing data, the more vulnerable the system is to attacks. If such technology is not properly protected, then the advantage it confers can easily be neutralised by a resourceful enemy.

It will be the task of the JCRU to protect both civilian and military assets, and its status as a reserve force could help, rather than hinder it. As General Peter Wall, the chief of the general staff, pointed out earlier this year, much of the cyber-defence expertise that the MoD needs will have to be recruited from the civilian sphere. A reserve force is also likely to be attractive to those who would not consider a normal military career.

Offensive and defensive cyber-security technology is developing so quickly that the MoD cannot rely on creating its own bespoke systems - it will need to work closely with civilian innovators if it is to build solutions capable of defending our assets against known and unknown threats. I have written in these pages before of the necessity for collaboration between security organisations in the fight against cyber-crime –the same goes for cyber-warfare. The JCRU will only be successful if it is able to combine the best of technology with human ingenuity from both the civilian and military worlds.

It serves nobody’s interest to cry wolf on a subject as serious as cyber-war – but that doesn’t mean that the threat is not serious. The consequences of complacency might not be as bad as Hollywood would have us believe, but they are certainly serious enough to warrant a considerable investment in our defences. That’s why the JCRU should be welcomed, as it will facilitate the interplay between civilian creativity, technology and expertise, with military knowledge, insight and experience. If it achieves this, it will form an important defence against attacks on the information infrastructure on which our civilian and our military organisations have increasingly come to rely.

Photograph: Getty Images

James Petter is the Vice President & Managing Director of EMC, UK & Ireland

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.