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Mon 30 November 2020
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David Hencke reports on parliamentary criticism of GCHQ’s decision to use a large portion of its new budget on swish new London offices

Britain’s cyber security operations are being sacrificed because spies at GCHQ have insisted on working in swanky expensive offices in central London, a report by the Intelligence and Security Committee has revealed. 

Some £3 million a year has been diverted from the annual operating budget of GCHQ – Britain’s signals intelligence service – to pay for glitzy offices for its subdivision, the National Cyber Security Centre (NCSC), in a state of the art building at Nova South in Victoria Street, Westminster. This is despite the fact that similar offices could have been obtained for half the price in Canary Wharf.

The decision was pushed through by the former Chancellor George Osborne, against the advice of the Government’s former National Security Advisor, Sir Mark Lyall Grant, who saw it as a waste of public money.

The minutes of the meeting when the pair are thought to have had a row about this have mysteriously disappeared.

Some £14 million was set aside for new accommodation for the 300 spies at the National Cyber Security Centre. GCHQ, which is based in Cheltenham, wanted them based in London near Whitehall. It could have taken offices in Canary Wharf at a running cost of £3.1 million a year. Instead, it went for Nova South at a cost of £6.4 million (later reduced to £5.8 million a year) – a move which was 83% more expensive.

It has now taken a 15-year lease on the building, ultimately owned by Land Securities, the UK’s largest property developer, and had to divert £3 million a year from its operating costs to pay for desk space working out at £21,000 per spy – double the cost for civil servants in Whitehall.

The Intelligence and Security Committee report states that “the difference in cost between Nova South and Canary Wharf would – according to the Draft Full Business Case figures – amount to around £50 million”.


The report goes on to disclose the cuts, which will last 15 years.

“This meant that GCHQ was unable to fund the repair of some infrastructure and security upgrades ***, as well as some business continuity and data back-up work,” it states. (*** indicate highly sensitive security work redactions that cannot be disclosed to the public).

GCHQ’s reaction was to defend the decision.

“We decided collectively as a leadership team that the importance to the department and the country of delivering these new national cybersecurity objectives were so important that that was a trade-off worth taking,” the report quotes it as saying.

The committee’s response is highly critical: “It is noteworthy that GCHQ was willing to postpone investment in operational capabilities in *** in order to allocate the NCSC more expensive accommodation. This will not be the only trade-off necessary: given that the Nova South lease is for 15 years, further such sacrifices will be required. In our view, operational capabilities should almost always come first – and the justification for departing from this was not made during the selection process.”

The report is also scathing about Whitehall’s handling of the whole process, which began with a normal procedure of drawing up long-lists and shortlists which initially did not include Nova South. Civil servants then changed the criteria to slant the choice by downplaying costs towards Nova South and put Canary Wharf as the second choice – knowing that the spies did not want to work there.

The committee states: “GCHQ’s failure to include the two criteria relating to cost as ‘key criteria’ in its Draft Full Business Case is indicative of the attitude to the budget for the new centre throughout this process. It is unacceptable for any public sector organisation not to include costs among the key criteria in a procurement process.”

Labour MP Kevan Jones, a member of the committee, said: “From the outset, the selection criteria used were faulty: an unnecessarily tight timetable was imposed arbitrarily at the outset, resulting in excessive haste which potentially led to faulty decision-making – and to good options being summarily dismissed due to non-availability within that timescale. 

“Locations outside London were never considered, and great emphasis was placed on finding high-end accommodation – without any case being made for that being necessary.

“The role of ministers in the process as a whole was highly unsatisfactory, culminating in the then Chancellor overruling the then National Security Advisor’s very strong advice to reject Nova South in order to confirm what GCHQ had made clear was the only option that they would accept.”

The committee offered Osborne – now editor-in-chief of London’s Evening Standard newspaper – the opportunity to read the report before it was published but he declined to receive it.

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