Kalifa Review of UK Fintech

Lord St John of Bletso Excerpts

Tuesday 27th April 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

My noble friend raises important points. These matters are always under discussion in the Treasury, although it is important to stress that there is a large amount of capital out there to support early-stage businesses. We see that in the valuations these businesses are achieving, even at an early stage. However, we will keep it under review.

[Lord St John of Bletso (CB)]

My Lords, while it is encouraging to see the Chancellor’s commitment to the scale-up visa scheme, what are the Government doing to ensure that our education system is updated to bring in financial, digital and business skills to encourage the next generation of entrepreneurs and innovators?

[Lord Agnew of Oulton (Con)]

My Lords, as I touched on in answer to an earlier question, we absolutely recognise how important is to get our young people enthused by this industry of the future. I referred to computer science, and we are certainly looking at increasing the number of maths teachers so that children can be more enthused at an early age. I hope to meet the Israeli ambassador shortly in order to understand more about Israel’s Magshimim programme, which gets 14 year-olds involved in a career in cybersecurity.

Budget Statement

Lord St John of Bletso Excerpts

Friday 12th March 2021 Lords Chamber

[Lord St John of Bletso (CB)]

My Lords, I join in congratulating the three outstanding maiden speakers and look forward to the next two maiden speeches.

While I support much of this Budget and applaud the Chancellor for the measures that he has taken to ease the pain of lockdown on individuals and businesses both large and small, I have reservations about the furlough scheme being extended to September. I had hoped that more would be mentioned on getting people back to work; we should be supporting jobs for the future rather than jobs in the past. It is obvious that many who have benefited from furlough will become unemployed and will have to start looking for work in a radically changed working world. The focus should be on more subsidised training for jobs in growth sectors, leading to improved productivity and economic growth.

I would also like to have seen more measures to support the green economy, promoting an energy revolution and more job creation. We have the energy White Paper on net-zero carbon emissions; more could be done to support this. While it is inevitable that there will need to be some tax rises, increasing corporation tax to 25% in 2023 has shattered the dream of the United Kingdom becoming the Singapore of Europe. There will naturally be a strong economic bounceback in Q3 and Q4 this year, but in the medium term, unless this can be followed by greater growth, the threat of inflation runs the risk of enduring stagflation.

Space Industry

Lord St John of Bletso Excerpts

Thursday 4th March 2021 Grand Committee

[Lord St John of Bletso (CB)]

My Lords, I declare my interests as disclosed in the register. If the Government’s ambition is for the UK to seize 10% of the global space economy by 2030, there needs to be much more joined-up thinking and a clear policy. I seriously question the likely success of the Government’s deal to rescue OneWeb. While it is admirable and imperative that the UK creates and supports a launch capability, such a strategy must go hand in hand with supporting those designing and building satellites, and constellation of satellites, which will need launching. My simple question is whether the UK’s funding of the space sector is effective at maximising growth. The UK needs to encourage innovation in the space industry and support space start-ups, which have the potential to deliver world-class and world-first technology.

Cyber Threats

Lord St John of Bletso Excerpts

Thursday 18th October 2018 Lords Chamber

[Lord St John of Bletso (CB)]

My Lords, I too thank my noble friend Lord Waverley for introducing this topical and important subject. I declare my interests in cybersecurity as listed in the register. Unlike other noble Lords, I wish to devote almost all my remarks to the impact of cyber threats on the economy, in particular on small and medium-sized enterprises.

I first became aware of the growing threat of cybercrime back in 2001 when I managed a few data centres for a large data provider, an ISP, here in London. Our clients, most of which were SMEs, required reliable, 24/7, secure web hosting with high-speed broadband. Many of them were being targeted by what were then referred to as “botnet cyber threats”. For noble Lords who are unaware of what a botnet threat is, it is otherwise known as a distributed denial of service attack. I built a team of tech experts to engineer DDoS mitigation tools, which countered the threat at the time. Since then, however, cybercrime against businesses and individuals has become significantly more intrusive and dangerous over the years.

SMEs make up 60% of all employment in the United Kingdom. Last year, it was reliably reported that 45% of all SMEs identified cyber breaches, costing many hundreds of millions in financial and reputation costs. Sadly, far too few SMEs have effective security measures in place, nor do they carry out regular effective cybersecurity training—a point mentioned by the noble Lord, Lord Lucas, and a few others. Therefore, they are particularly vulnerable to even the most basic cyberattacks.

As we know, cybercriminals are increasingly targeting individuals for their credit cards and in other frauds. According to a report by Thales, the United Kingdom is the most breached country in the EU, but most UK businesses are blissfully naive and complacent about the increasing threat. The noble Lord, Lord Browne, drew attention to the Government’s five-year National Cyber Security Strategy, which they published in November 2016 when committing to invest £1.9 billion in cybersecurity. While I respect that the National Cyber Security Centre has provided excellent guidelines and advice to SMEs, many would argue that the laudable commitments are targeted more at big businesses and critical national infrastructure, with insufficient focus on SMEs.

We are living through a digital revolution. We have artificial intelligence, autonomous vehicles, drones, biotech, blockchain, the cloud and the internet of things, which has resulted in an ever more interconnected world. It is forecast that, by 2020, 50 billion devices will be interconnected around the world as a result of the internet of things. Technology is ever more critical to the UK and our digital economy has grown 2.5 times faster than the rest of the economy over the last 10 years. The digital tech sector is worth nearly £184 billion to the UK economy. But I stress that our dependence on technology has come at a cost. It was recently reported by CNBC, from a reliable global survey, that the cost of cybercrime to the world today has reached as much as $600 billion a year, which is 0.8% of global GDP. In this country we have seen attacks on our critical national infrastructure and we need to be increasingly vigilant of this increased threat. We should be cognisant of what my noble friend Lord Ricketts mentioned: the risk of a category 1 incident.

I mentioned that individuals are increasingly being targeted by cybercriminals. I understand that 91% of cyberattacks are delivered by email, putting anyone with an email account in the firing line of cybercriminals. I entirely agree with the comments by the noble Lord, Lord West: cybersecurity is about risk management. In this regard, it is increasingly important that individuals are better informed about simple IT housekeeping, such as regularly changing their email account passwords—a point made by the noble Lord, Lord Borwick—downloading basic security software and regularly backing up their data. This alone would substantially reduce the risk from most cybersecurity breaches.

Online data has pushed identity theft to a record high in the UK. The anti-fraud agency CIFAS has said that ID theft cases rose by 1% last year to almost 175,000, with eight out of 10 cases using information found online. This represents a 125% rise over the last 10 years. Phishing remains the number one threat action. Almost half of UK manufacturers have fallen victim to cyberattacks and many more attacks go unreported or unrecorded, according to the manufacturing trade association, EEF.

Under GDPR, introduced in May this year, the fines businesses can face for data security breaches are crippling. Two years ago, following the TalkTalk hack, the company was fined £400,000; under the new GDPR fines schedule, this would be nearer to £60 million. Last year, Lloyd’s of London estimated that a major global cyberattack on a cloud provider could lead to losses of around £40 billion. The majority of these losses are not currently insured. The police and the security services are implementing the Prevent strategy to increase awareness across businesses.

Despite the massive need to sustain our digital economy there is a huge skills gap, which seems to be widening. In a recent poll, nearly half of all organisations admitted they had a chronic shortage of IT security professionals, and 70% thought this had a significant impact on their business. Uncertainty over Brexit is also exacerbating the lack of digital skills in the domestic economy, with a lot of IT talent looking to move elsewhere. We need a far more innovative approach to bridge the cyber skills gap, and I wholeheartedly agree with the noble Lord, Lord Lucas, on the need for more training. Wide-ranging training is key for businesses of any size attempting to counteract cyber threats. It is the responsibility of everyone within a company to protect not only the company but its data. All staff, not just IT or security staff, need to be aware of what to do—and what not to do—to make sure that breaches do not happen either accidentally or on purpose.

In my opinion, within the business community there should be company-wide strategies, from the chief executive down, for dealing with and in readiness for the outcomes of a cyberattack, should the worst happen. Equally, despite the national cybersecurity initiative, a lot more should be done in both the private and public sectors to promote cyber awareness, enhance the cyber skills gap and invest more in measures to protect the critical national infrastructure. Initiatives such as TechVets, which helps military veterans into technology and cybersecurity roles, are a great way to harness unrealised pools of human resource potential.

I noticed in the very useful briefing from the House of Lords Library that the UK has committed to working in close collaboration with its international allies, including—as a member of the EU—its partners in NATO, to improve cybersecurity. Can the Minister give a reassurance that after our exit from the EU, our Government will continue their cyber co-operation with our counterparts across Europe? In conclusion, I am not trying to be a doomsayer; I am simply advocating being proactive rather than reactive.

Health: Diabetes

Lord St John of Bletso Excerpts

Tuesday 18th October 2016 Lords Chamber

[Baroness Chisholm of Owlpen]

The Government are absolutely committed to preventing more amputations, but we believe very strongly that money should go towards multidisciplinary teams. These have been seen to be a huge success in various initiatives taken by the likes of King’s College Hospital in Sheffield, where multidisciplinary teams were put together. It has been shown that, in Sheffield for instance, there was a 45% reduction in the number of amputees over three years, along with significant financial savings and a 90% patient satisfaction rating. This is the way to go.

[Lord St John of Bletso (CB)]

My Lords, given the high prevalence of type 2 diabetes and the associated inactive lifestyle of patients, what measures can be taken to promote more exercise of these patients?

[Baroness Chisholm of Owlpen]

The noble Lord is absolutely right: a key issue in dealing with diabetes is education. We have put together several packages. For instance, Public Health England, NHS England and Diabetes UK are working together on Healthier You, which seeks to educate people who might have type 2 diabetes. We are also looking at how we can get to these people in different ways, such as web-based approaches, apps and joined-up thinking. It is sometimes difficult for people to get to clinics, and it might be easier for them to look at digital or the web.

Sudan and South Sudan

Lord St John of Bletso Excerpts

Monday 8th December 2014 Grand Committee

[Lord St John of Bletso (CB)]

My Lords, I am grateful to my noble friend Lord Sandwich for securing this important debate on one of the most pressing challenges facing Africa. I wish to devote my brief contribution to current challenges in South Sudan.

I met President Salva Kiir just a few weeks ago when I was in Juba on a private visit, and was able to meet several NGOs there. My first impression on landing in Juba—it was my first time there—was that it was as though one were landing at a United Nations military airport, with few domestic airlines. It is indeed tragic that the dreams of peace and prosperity after gaining independence in July 2011 have been shattered through the recent political and ethnic power struggles. The new conflict has reversed so many of the gains achieved post-independence, particularly disrupting health services, access to clean water, sanitation, transport infrastructure and, most importantly, food security.

As my noble friend mentioned, South Sudan is now in a level 3 crisis. The country faces chronic poverty, inequality is a massive problem, and there is a growing threat of famine now that the dry season has started. Almost 2 million people are displaced, with at least 400,000 South Sudanese across the border in Ethiopia and other neighbouring countries. Many of this displaced population are in camps that are largely inaccessible to relief agencies. It is alarming that ethnic tensions and violence have returned to the forefront of intra-South Sudanese relations, with increasing mistrust of their political leadership. There is a strong supposition that both sides have used ethnicity to fuel conflict to stay in power and that the fighting has been more complex than simply Dinkas fighting Nuers. I am in no position to pass judgment, but what appears to be the case is that the military lacks decisive leadership and is deeply divided. To quote a recent Chatham House report:

“South Sudan is not a country with a military. Rather, it is a military with a country”.

Most people in South Sudan either want the security of being left alone to get on with their lives or want the SPLA to deal with threats to local security, which normally stem from outside their immediate community.

One issue that we discussed with President Salva Kiir was that of the borders. Clearly, one of the unresolved issues following the 2005 CPA is the demarcation of the borders, particularly in Abyei, South Kordofan and Blue Nile. The President mentioned that he was seeking to identify the original maps to resolve this dispute.

The dramatic recent drop in oil production revenues over the past few years has also had a catastrophic impact on the economies of both South Sudan and Sudan. As the recent Chatham House report on South Sudan said:

“Politics and development are not alternatives in South Sudan, they are two sides of the same coin … It appears that Western countries, including members of the Troika, do not have a coherent policy towards South Sudan, with strongly worded statements followed up by inaction”.

There is an ever-growing groundswell of support for civil society, more specifically the churches, traditional local authorities, media and other civil society groups. Despite the continued conflict and worsening humanitarian crisis, there are a few positive developments. Since independence, there has been a revision of the national curriculum for all primary and secondary pupils, which has so far been remarkably successful. This has been funded by Global Partnership for Education and supported by DfID. I have the report here, but time restricts me from speaking to it. There is a strong need for a shared vision for South Sudan that unites rather than divides the very diverse society. Most commentators are in agreement that inclusivity is the only way in which to achieve a sustainable peaceful solution. The international community has a pivotally important role to play, but it is clear that there needs to be a more co-ordinated effort. Our Government’s work in South Sudan has made a significant contribution to addressing the MDG challenges, but we need to keep the focus.

Government Procurement Policy

Lord St John of Bletso Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord St John of Bletso]

My Lords, this is an opportune time for a debate on this issue. It comes just three days after the speech by the Cabinet Office Minister, Francis Maude, on proposals to radically overhaul and improve public procurement. It also comes at a time when all government departments are under pressure to cut costs and when small and medium-sized enterprises are in desperate need of better access to bid for government business, which will call for less red tape.

I am grateful to the noble Lord, Lord Sugar, for giving us the opportunity to debate this important issue. No one in your Lordships' House is better qualified, given his vast commercial experience. I also thank the House of Lords Library for the excellent briefing pack on this debate. As a member of the House of Lords Information Committee, I hope that many Members who recently joined your Lordships' House will avail themselves of the tremendous support provided for these topical debates by the Library.

My interest in the subject of this debate goes back to the Gershon review of 2004, which both set and achieved an ambitious target of efficiency gains across government departments and the wider public sector. Procurement was clearly the largest area in which gains were made. Just as important, the review focused on increasing productive time. Undoubtedly, huge savings in costs and efficiencies followed from the review; but there is a lot more to be done, which is where I will address my few comments.

Every year since then—this is my other reason for speaking in the debate—I have hosted a series of lunches and dinners with members of the purchasing departments of public and private sector organisations in order to exchange knowledge, experience and success stories, and also to learn from errors. That is why this issue is very important. The noble Lord, Lord Sugar, made the point about having effective and strong procurement managers. Clearly, in the past, procurement managers in the public sector have been severely impeded by bureaucracy and red tape emanating not just within the United Kingdom but also from Brussels.

My other interest in this debate has been my desire to promote greater access for SMEs to compete for government contracts and services—by which I mean enabling them not just to be cheaper but to act more expeditiously. With the revolution over the past 10 years in online business this process can and should be a lot more efficient in both cost and time. As the noble Lord, Lord Sugar, mentioned, procurement accounts for £238 billion, or almost 35 per cent, of public sector expenditure. With the budget deficit, efficient and better procurement is essential, not a luxury.

Sir Philip Green's efficiency review of public spending emphasised credit ratings, buying power and the need to leverage spend as well as to mandate centralised procurement for common categories. Very importantly, he also highlighted the need to produce and use accurate data and to simplify and minimise demand and specifications. Although there are clear advantages to centralised purchasing and bulk buying, which allow prices to be driven down and minimise waste and administration costs, there also are dangers which the noble Lord, Lord Sugar, did not outline. I shall raise two very small dangers. First, I believe that innovation might be stifled—by which I mean that if all decisions are made centrally there will be very little room for new initiatives and alternative plans and products. Secondly, differences in local needs might be ignored. There is always a danger that a “one size fits all” attitude could become a matter of “one size does not fit anybody”.

Many SMEs still find the whole process of public procurement too onerous and decide to opt out. My question is: what can the bigger suppliers do to encourage SMEs to get involved through innovative partnering agreements? One of the key objectives must be to procure for an outcome with some flexibility. Procuring for the outcome rather than for the particular product allows suppliers the space to come up with new methods and equipment to solve a particular problem. To enable that, the Government need to put in place financial mechanisms that can cope with payment by results.

We also need to look at cross-departmental incentives. Many outcomes can benefit more than one government department; for example, getting people back to work eases the strain on the health service and others, not just the Department for Work and Pensions. Yet how does one incentivise one department to invest money in a project that will benefit others? Time restricts me from elaborating on this proposal, but what is needed is a budget and payment system that can manage this cross-section benefit.

My time is rapidly running out. While there has been a lot of debate about the benefits of PFIs, I believe that public/private partnerships have an extremely important role to play, with the private sector carrying some of the financial risks of new projects. This is strengthened by payment-by-outcome approaches, but several problems need to be addressed.

I believe that there are huge opportunities but equally huge challenges. Better information is essential. How do you incentivise different departments? The scale and complexity of the public sector is such that there is clearly not a common solution to procurement strategies. Technologies can and should make a huge difference to procurement. I believe that more dialogue between public and private procurement managers could be part of the paradigm shift required in the public sector. A professor at Henley Business School aptly summarised the situation when he said:

“No other aspect of government could release so much money, so readily and with such little political disagreement or social detriment ... Public procurement, with a few notable exceptions, is massively under-led, misunderstood, and under-focused”.

This transformation of procurement as a discipline is long overdue.