Senior Lecturer, University of Portsmouth

Author Bio ▼

Dr Alison Wakefield is Senior Lecturer in Security Risk Management at the Institute of Criminal Justice Studies, University of Portsmouth. She is also Vice Chairman of the Security Institute, the UK’s main member association for security practitioners, and Academic Adviser to the Chartered Security Professionals Registration Authority. Alison’s publications include Selling Security: The Private Policing of Public Space (Willan Publishing, 2003), The Sage Dictionary of Policing, edited with Jenny Fleming (Sage, 2009) and Ethical and Social Perspectives on Situational Crime Prevention, edited with Andrew von Hirsch and David Garland (Hart Publishing, 2000). She is currently writing a book for Sage examining security threats and provisions holistically, from the global through to the individual level.
May 19, 2016

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Brexit is Bad News for the Security Industry

If the UK votes to leave the EU, this will see the end of a 43-year partnership that will have a decisive impact on the UK for generations.

In this article I outline some of the key reasons why a Brexit would adversely affect both the UK and its security industry.

Impact on our economy

Most polls by both generalist and specialist trade associations have found a vast majority of firms, large and small, are in favour of remaining in the European Union. Among these is ADS, whose members overwhelmingly believe it would be better to remain.

In their April survey, this was the view of 69% of SME respondents and 73% of large firms. Only 10% believed it would be better for their business if the UK left the EU, and the remaining 20% responded ‘don’t know/makes no difference’. Their position and the reasoning behind it are set out clearly in an online article.

On the basis of the economic implications of a Brexit, it is clearly within the interests of the business community, and the security industry as a major part of this, that we stay within the EU. Doing so will protect our essential trade with other EU nations – countries do more business with economies that are large and close to them – as well as other economies through the EU’s trade agreements.

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What will a Brexit mean to the security industry?

A panel debate about the implications of Brexit to the security industry will be taking place at IFSEC Internationl 2016. Register here

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The Treasury’s estimate that a Brexit could cause economic damage to the value of 3.4% to 9.5% of GDP by 2030 is far from unreasonable, despite the claims of Brexiteers to the contrary.

Assertions that the EU is shrinking are untrue: despite the ongoing euro and Schengen challenges, International Monetary Fund figures indicate that EU gross domestic product grew 2% last year, while even that of the eurozone grew 1.6%, and they are expected to grow at a similar pace this year and next.

The UK is one of the world’s fastest growing developed economies despite the market uncertainties over the last two years that have been generated by the Scottish referendum, general election and EU referendum all occurring within short succession.

London is the world’s largest financial centre and our financial services sector, accounting for 12% of GDP, has made an essential contribution to the UK’s economic recovery. For this to continue, protecting it is critical: many non-EU companies, such as Swiss and US banks, base their European headquarters in London in order to participate in the single market.

The ‘passporting’ rights of authorised firms allow them to access EU-wide clients, benefit from harmonised regulation and undertake activities in other countries within the European Economic Area (EEA).

The economic implications of a Brexit cannot be predicted more precisely by the Treasury or others since the terms of a post-Brexit relationship between the UK and the EU would have to be negotiated, and this would only begin after a vote to leave. Brexiteers are sharply divided on the trade policy that should be pursued, between the free marketeers, such as Douglas Carswell, who advocate a laissez-faire trade relationship with the world, including the EU, and the de facto protectionists such as Nigel Farage, who want to restrict immigration and support for industrial subsidies.

In the event of a Brexit, we can have free trade or protection but not both. We should not be choosing between these approaches in any case: a balanced trade policy is best suited to global market conditions in the 21st century. The lack of common vision is the most concerning flaw across the pro-Brexit campaigns, and the reason why the political turbulence will continue if we leave the EU.

The three main models on which a Brexit could be based are the Norwegian model (based on membership of the European Free Trade Area (EFTA) and the EEA), the Swiss model (based on membership of EFTA, supplemented by a series of bilateral agreements concerning market access in specific sectors) and the World Trade Organisation (WTO) option (whereby the relationship would be governed by the respective obligations of the UK and EU as members of the WTO).

In the first model, the UK would remain fully bound by single market rules but have greatly reduced power. The second lacks an adequate institutional framework to enable arrangements to keep pace with constantly evolving EU legislation, and may well not be on offer from the EU side.

The evidence from the precedents of these two models suggests that the deeper the agreement, the more likely the UK will need to accept free movement of EU citizens, a position that appears to be intolerable to most of those supporting a Brexit.

The WTO option would, however, present severe restrictions in market access that could make it unattractive both to the UK and to the EU. For example, UK-based financial institutions would most likely lose automatic passporting rights into the EU. As outlined by European Law Monitor, it could take us 10 years or more to legally disentangle ourselves from the EU: a very messy and time consuming process that would certainly not be good for business because of the uncertainty that it would generate.

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Impact on our service sector

One of the most compelling reasons why a Brexit would be an economic disaster for the UK, and a significant disadvantage to the security industry, is the impact that it would have on our service sector. This accounts for 80% of the UK economy and, according to the Barclays Trade Index, should account for half of the UK’s exports within a decade.

Organisation for Economic Co-operation and Development figures indicate that the UK is the world’s second largest net exporter of services (to the value of 361.7 million USD in 2014), and that services constituted 40% of the UK’s exports in 2014.

Most existing trade deals exclude services, and the deals with the EU that do so also require free movement of people and common regulations. In the event of a Brexit, the UK would need to negotiate access to the European single market for its service industries, whereas EU manufacturers would automatically enjoy virtually unlimited rights to sell whatever they wanted in the UK under global World Trade Organization (WTO) arrangements, underpinned by the General Agreement on Tariffs and Trade (GATT).

Most (140) of the WTO’s 162 member states are also signatories of the General Agreement on Trade in Services (GATS), which governs services, representing up to 20% of global trade. Arrangements for global trade in services are far less developed, however.

British exports would be constrained by non-tariff barriers (NTBs) (quotas, levies, embargoes, sanctions and other restrictions) if the UK ceased to apply EU single market rules. Non-tariff obstacles to trade in services can include restrictions on ownership, personnel or remittance arrangements; discriminatory taxes, licensing regulations or procurement regulations; restrictions on import of necessary materials; absence of relevant international standards; inadequate protection of intellectual property; and government subsidies to locally owned firms.

The UK’s specialisation in services therefore makes membership in the EU single market critical. The UK service sector would also want to retain deals such as in telephony, so that UK citizens benefit from the abolition of roaming charges.

In the period of economic uncertainty that would follow a Brexit, those likely to be hardest hit would be the self-employed and other smaller enterprises, which suffer most in the event of a general lack of confidence or liquidity in the market as they are perceived to be higher risk.

Smaller businesses would also be impacted by the extent to which international companies carry out their threats to leave the UK or relocate their headquarters in the event of a Brexit, and new companies that would have set up in the UK in order to access the EU decide to locate elsewhere.

It should also be noted that being a member of the EU makes the UK more creditworthy, as indicated in recent warnings by credit ratings agencies Moody’s, Fitch and Standard and Poor’s. Following a Brexit, UK borrowers might have to pay a higher price for credit and the availability of external financing for the entire UK economy might be reduced, which would reduce availability of credit for smaller enterprises.

Impact on UK innovation

The area of innovation is another dimension of the UK’s economic development that is especially relevant to the security industry. Maintaining an innovative knowledge economy and solving today’s challenges in areas such as security requires global collaboration.

Figures from UNESCO (the UN Educational, Scientific and Cultural Organization) indicate that the EU is the world leader in terms of its global share of science researchers (22.2%), ahead of China (19.1%) and the US (16.7%), while the UK (with 0.9% of the world’s population) has 3.3% of the world’s scientific researchers, producing 6.9% of global scientific output. When researchers and entrepreneurs pool expertise and resources they can achieve much more together than they can do alone.

The EU has tripled its research and innovation budget over the last decade while UK investment in these areas has shrunk to 0.55% of GDP, the average among other advanced countries being 0.8%. The EU’s current seven-year research and innovation programme, Horizon 2020, facilitates international co-operation and is funded to €80 billion.

The UK, which contributes about 11.5% of the EU budget, has received €6.1bn or 15.4% of the Horizon 2020 funds allocated to date, and secures about 16% of all EU research and innovation funding. There are no guarantees that money not spent on the EU budget would be invested in UK research and innovation, and in providing a one-stop shop for funding and bringing researchers and entrepreneurs together from across Europe and beyond, the EU adds a layer of capacity that the UK could not replicate on its own.

Access to these funding sources is one of several key reasons why remaining in the EU is important for industrial innovation in the UK, as emphasised in a letter to The Times by 150 Fellows of the Royal Society including Professor Stephen Hawking.

Impact on our manned guarding industry

The positive impact that EU regulations have had on the security industry should also be recognised. In a recent article by my University of Portsmouth colleagues Professor Mark Button and Peter Stiernstedt on the consequences of a Brexit for the manned guarding industry, the authors explore a number of possible outcomes.

Arguably their most compelling arguments relate to the variety of regulations that have come from the EU and impacted positively on the security sector: the working time directive (hours worked and paid holidays), equal pay, maternity rights, TUPE protections, health and safety, public procurement and employees’ rights to information and consultation.

As the authors recognise, clearly they would not all disappear in the event of a Brexit, but many would become viable targets for the Conservative right wing that would be likely to be leading our government in the medium term.

They also note that, having always been a reluctant regulator of the security industry, a Conservative government that is free of the EU may be tempted to water down regulation even further. The prospect of the sector starting to revert back to its ‘wild west’ days characterised by poorly motivated guards from the bottom of the labour market, insufficient training, excessive working hours and criminal infiltration could therefore be a worrying possibility.

Impact on the future of Europe

Former Prime Minister Gordon Brown summarises what the future of Europe might look like in the event of a Brexit:

It is not difficult to imagine Europe after a British withdrawal: a French-German axis in control, Russia empowered, America bypassing a now-weakened Britain, pro-EU Scotland threatening once again to leave the UK, and England turning inward as Eurosceptics convince themselves that Britain always is strongest when alone.

Brown argues that economic insecurity is fuelling much of the public’s nostalgia for British sovereignty, and emphasises that the UK is at its best when it sees itself as a leader in Europe. As the EU’s second-largest economy, with the third-largest number of seats in the European Parliament, the UK should be a driving force in setting the EU agenda, promoting our values and championing change.

Having faced a succession of crises since 2008 – the financial crisis, the Greek crisis, the Ukraine crisis and now the refugee crisis – once the UK has made its decision, the EU needs to develop a much clearer vision of its future and effective solutions to its challenges, with the UK having a significant voice.

It already has such a voice: the UK is on the winning side of the Council of the EU almost 87% of the time, is one of the most successful countries in getting what it wants out of the EU, and retains vetoes in critical areas like foreign policy, taxation and the budget framework. Legislative proposals and draft legislation that come from the EU are scrutinised by the UK Parliament, who can engage in dialogue about these with their own governments, the European Parliament, European Commission and the parliaments of other member states.

The implications of a Brexit are grave. Our country, and in turn our security industry, need to be in a position to confront the uncertainties and challenges of the future by being part of a strong Europe, not retreating to the sidelines.

Dr Alison Wakefield will be speaking on the ‘Inspirational women in security’ panel at IFSEC International 2016. She will share experiences and advice from her successful career in security and she will join the Chair of the National Association of Healthcare Security, Jayne King and WiS Lead at ASIS UK Chapter, Dawn Holmes, among others.  The panel will take place on the 23 June 2016 in IFSEC’s Security Management Theatre at ExCeL London. Register here.

 

 

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6 Comments on "Brexit is Bad News for the Security Industry"

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Advent_IM_MD
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DrAlisonsTweets Welcome to the twitterati ☺

FireflyTo
Guest

Don’t forget the TTIP trading model.

David Pryke
Guest

FireflyTo I am not quite certain, are you for TTIP or against ?  It seems to me to be the most dangerous trading deal anyone could possibly entertain … unless you are American `Big Business` !!!

nova_security
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ifsecglobal Still to make my mind up, but i think your article is very one sided!

ifsecglobal
Guest

nova_security Agree – it’s one side of the story. Here’s another view: https://www.ifsecglobal.com/why-the-eu-hampers-cyber-security/

nova_security
Guest

ifsecglobal UK never fully adopted EU standards,PD6662 for intruder was a get out clause. Some great products in EU which cant be used here