The Chancellor is understood to have pushed MI5 and MI6 to consider devoting more money and manpower to defending Britain from cyber attacks and espionage from countries such as China.
By James Kirkup, and Tom Whitehead
10:35PM BST 26 Oct 2012
British intelligence agencies’ counter-terrorism work could be scaled back after an intervention from George Osborne.
However, senior ministers and officials are resisting pressure from the Treasury, warning that cutting counter-terrorism spending is too much of a risk.
MI6, the Secret Intelligence Service, is said to be fighting a fierce rearguard action against any move to reallocate its counter-terrorism resources. Theresa May, the Home Secretary, is also said to be cautious about relaxing Britain’s defences against extremist attacks.
Senior sources have disclosed that Mr Osborne has asked agency chiefs if, following the London Olympics, Britain’s spending on intelligence should be shifted significantly away from counter-terrorism. The Chancellor is understood to have asked them to consider how current spending decisions might look in the coming decades, suggesting future generations might question why today’s leaders did not devote more resources to cyber security.
His intervention, at a meeting of the National Security Council in the summer, is understood to have inflamed a row within Whitehall about the intelligence agencies’ future priorities. MI5, MI6 and GCHQ are all under growing pressure to do more to defend British interests from internet-based attacks.
The Intelligence and Security Committee of senior MPs and peers this year said it was “concerned that much of the work to protect UK interests in cyberspace is still at an early stage” and suggested the work should be stepped up urgently.
William Hague, the Foreign Secretary, this week told The Daily Telegraph that he saw evidence daily showing “deliberate, organised attacks” against corporate and government networks from “cyber criminals or foreign actors”.
However, the agencies are said to be at odds over how much to spend on internet-based work, who should pay, and which agency should take the lead.
One Whitehall source described the situation as “a typical Whitehall turf-war”, warning that the disputes could hamper the agencies’ bid for funding in the next spending round. The combined budget for the intelligence agencies will be £2.1 billion in 2014-15, a cut of 7 per cent over four years.
Mr Osborne’s challenge over terrorism is his second major intervention on security issues in recent months. Earlier this month, The Daily Telegraph disclosed that he had helped force military commanders to draw up plans for a faster British withdrawal from Afghanistan.
James Brokenshire, the security minister, declined to comment on discussions at the NSC, but said that intelligence officials “constantly examine” new and emerging threats to the UK.
He said: “Clearly, national security is the absolute priority for any government and therefore we will always ensure that national security receives sufficient funding.
“Does that mean that we shouldn’t constantly innovate and look at ways in which we can be more effective? No, it does not. But clearly that underlying responsibility remains.”