New cloak, Old dagger: How Britain’s Spies Came in from the Cold 
by Michael Smith.
Gollancz, 338 pp., £20, November 1996, 0 575 06150 2
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Intelligence Power in Peace and War 
by Michael Herman.
Cambridge, 436 pp., £50, October 1996, 0 521 56231 7
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UK Eyes Alpha 
by Mark Urban.
Faber, 320 pp., £16.99, September 1996, 0 571 17689 5
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Why are the British secret services so secret? The assumption is that they are so because they handle secret information. Yet there is no reason why an organisation entrusted with secret information should itself be secret. Most companies and large organisations generate material of great commercial sensitivity, but few of them would consider lodging it in a secret department with considerable autonomy. Why should the British government have decided to act differently? Why did it create a secret adjunct to the Civil Service in 1909, and why has it preserved it until the present day?

The question of what exactly this secrecy serves to protect is crucial to the history of the British intelligence services. Yet no one ever writes about it, and although these books offer much that is new and interesting, they do little to remove this huge obstacle to understanding. Its significance is confirmed by the sheer size of the secret organisations. The domestic intelligence service, known generally as MI5, continued to expand even after the end of the Cold War, and by 1992, when Stella Rimington took over, it had more than 2300 staff. The volume of material circulated by GCHQ, the signals intelligence agency, and by SIS, the overseas intelligence service, also ensures them a significant place in government. In 1995, John Major estimated that the Foreign Office received 40,000 pieces of secret intelligence a year, around 25,000 of them from GCHQ and 15,000 from the SIS.

The volume of material is so great that it requires a separate secretariat and committee, the Joint Intelligence Committee or JIC, to compile weekly assessments from the data provided by MI5, SIS and GCHQ. Yet the secret services are now seeking a more central role in policy-making, through the collection and dissemination of information on terrorism, drug trafficking and international crime. There need be nothing sinister in this, but why do they remain so secret?

The simple fact is that the secrecy which surrounds these organisations does not serve to protect democracy from the forces of disorder, but to protect the secret services from democracy. The creation of the original Secret Services Bureau (SSB) in 1909 coincided with increasing international tensions, especially a growing fear of Germany. But it also coincided with the government realisation that full democracy was inevitable, and with the worry, exacerbated by industrial unrest, that a stable political system could not be founded on the wishes of the majority.

In this light, the creation of an unacknowledged arm of the state, carefully protected from democratic view, with powers to act against nations that were technically friendly, and against members of the public who had not broken the law, seems less than benevolent. The SSB was effectively buttressed against democracy, and quickly became a refuge for those disillusioned by rapid political change. By 1912, it was already fantasising about German money being behind dock strikes, and was compiling detailed lists of those people living in Britain whose loyalty it could not guarantee.

The British secret services do not in fact exist to protect democracy itself, but rather what they see as the essential preconditions for democracy. This loyalty to some form of proto-democracy is the key to understanding their history, for they have consistently used it to defend their democratic credentials, although they have remained outside democracy and represent the opinions of only a small minority. The implications of this policy became very clear after 1914, when the outbreak of the First World War permitted a rapid expansion of the secret services, and a dramatic extension of their functions. The domestic branch of the SSB, now known as MI5, developed its own test for loyalty. ‘If they are not for the success of our country,’ it reported of pacifists in 1916, ‘it is not unreasonable if they are classed as pro-German.’ The secret services became convinced of the need for a powerful centralised state, with strong police and military forces and a cadre of civil servants responsive to the needs of business and industry.

Only if these essentials were maintained could participation in government be safely extended to the majority of the population. Fear of the Left was indeed so strong that in 1918 the Prime Minister was advised to grant the secret services £1,000,000 invested in the War Loan, to protect their finances against any postwar Labour government. As Michael Smith describes, these problems were exacerbated by the budget cuts which followed the end of hostilities. In 1919, MI5’s annual grant dropped from £100,000 to £30,000, forcing it into unsavoury alliances with the political Right. It recruited Maxwell Knight, later Director of Intelligence of the British Fascists, to head its counter-subversion unit, and in 1927 sent Joseph Ball, who had been conducting black propaganda against the Labour Party, to become Director of Publicity at Conservative Central Office. A secret service diaspora was thus created whose influence is still being felt.

Chronology alone is not sufficient to unpick these complex relationships, which is why the theoretical approach adopted by Michael Herman’s Intelligence Power in Peace and War is so welcome. Herman worked in GCHQ until 1987, but he feels it is outdated to regard the secret services as simply ‘dealing in each other’s secrets’, and advocates a greater commitment to ‘all-source analysis’, whereby secret information is analysed alongside material from ‘open’ sources to present a more accurate picture. If this were extended it would mean that MI5, SIS and GCHQ could operate as general suppliers of intelligence to the Civil Service. What Herman overlooks, however, is that these departments are not part of the Civil Service, and the secrecy under which they have operated since 1909 is vital to their distinctiveness. The absence of official files is the most obvious indicator of the dramatic repositioning which took place in 1909. After that date the secret services did not report to elected officials, were not acknowledged by the Cabinet, and had no need to preserve their papers, for they did not work by precedent and had no concept of public scrutiny.

Resistance to democracy remained a feature of the secret services into the Fifties and Sixties, and was the basis of the bizarre fascination which MI5 had with the Wilson governments. However, in the Seventies and Eighties attitudes began to change, just as right-wing theorising about democracy itself began to change. Where there had once been a faith in the centralised state as an essential precondition for democratic government there was now a faith in market capitalism. This was increasingly regarded as a vital stage in the growth of democracy, and was thus to be encouraged in countries that were seeking to be democratic, and defended in those which could already boast representative government.

There was an awkward period of transition from the old attitudes to the new, particularly focused around the power of the unions. The 1971 Industrial Relations Act and the 1972 miners’ strike created such a fear of union militancy that there was a rapid transfer of resources from MI5’s K Branch, which dealt with counter-espionage, to F Branch, which dealt with domestic subversion. By 1983, when Cathy Massiter revealed the extent of F Branch’s work against CND, there was considerable disillusionment among junior officers about the emphasis on counter-subversion. When Antony Duff became head of MI5 in 1984 he was keen to reduce the importance of F Branch. As he told Mark Urban, he was supported by the majority of his staff ‘except for a handful of old sweats in middle management’.

Duff seems to have been a new force within MI5: one intelligence officer told Urban admiringly that ‘he could talk to working-class people without fuss.’ Yet despite these novel abilities, fear of the unions continued through the de-unionising of GCHQ, which was completed in 1987 (and has now been reversed by the Labour Government), though by that time the secret services were increasingly committed to market capitalism, the new dogma of the Right. This model gained greater credibility after the collapse of Communism in 1989, and its pervasiveness explains why, in 1990, Margaret Thatcher, who was otherwise a great supporter of the secret services, could disagree so strongly with Percy Cradock, Chairman of the JIC, over his assessment of Gorbachev. To Cradock he represented the old threat of Communism, which could only be met by force, but to Thatcher he represented the transition to market capitalism, and was ‘a man we can do business with’.

The economic functions of the secret services have naturally increased in line with this new ideology. The 1989 Security Service Act, which defined the role of MI5, empowered it to ‘safeguard the economic well-being of the United Kingdom’, and five years later, the Intelligence Services Act confirmed the gathering of economic intelligence as one of the principal responsibilities of both GCHQ and SIS. Mark Urban was assured by MI5 officers that the clause about ‘economic well-being’ had no practical meaning, and that it had only been inserted in the 1989 Security Service Act ‘just in case’. This is unconvincing. The fact is that the secret services exist to defend the social, economic and political basis of market capitalism, and this is now enshrined in legislation.

The links between the secret services and the City are continually reinforced by the large number of SIS officers who retire at 55 to join merchant banks. In the words of ‘Nigel West’ (a.k.a. Rupert Allason, the former Tory MP), the postwar drift to the City ‘was ... sponsored by men such as George Young, the SIS Vice-Chief who joined Kleinwort Benson in 1961, and Frank Steele, a legendary figure from the Cold War who followed in 1975’. Other SIS officers subsequently joined Hambro’s, Morgan Grenfell, Lazards, Barings and Samuel Montagu. These links are reflected further in the way that SIS officers still refer to their department as ‘the Firm’, and by the move in 1994 to new £230 million offices at Vauxhall Cross, thus giving MI5 a corporate image more in keeping with its economic role. As the House of Commons Select Committee on Intelligence and Security acknowledged in its 1995 report, the Department of Trade and Industry is now one of the ‘two key “customer” departments for intelligence’, second only to the Foreign Office.

The reluctance of writers on the secret services to engage with these matters is remarkable. In New Cloak, Old Dagger, Michael Smith, a Daily Telegraph reporter, has tried to distil into one volume all the information in the public domain about their history and development. His account is clear and concise, but he does not examine the flow of information through the structures he describes, or the role of the intelligence services as advisers of government. Smith admits that the new definition of national security ‘is not reassuring’, and that ministers and civil servants ‘could easily find they have made a mistake in allowing the security service [MI5] to increase the scope of its activities without a corresponding increase in its accountability.’ Yet he argues that a reduction of the secret services is something ‘that neither they nor the country can afford’. Urban’s answer to the charge that the secret services are undemocratic is apparently that they are not doing any harm. Herman meanwhile notes that the secret services generally seek political approval for their operations, and argues that, as there have been ‘very few exceptions’ to this rule, they deserve to be trusted. He believes that if no one is complaining, the system must be working, arguing that as criticism of the secret service has declined in recent years, ‘even those most critical of it now accept that it has some place in the modern state.’

Mark Urban’s UK Eyes Alpha concentrates less on organisation and more on the flow of information and its role in policy-making. He is particularly revealing about Thatcher’s use of the secret services. When she became prime minister her knowledge of these matters was very slight. The SIS officer brought in to brief her recalled that ‘her experience of the outside world, of foreign affairs, of secret intelligence and security, was virtually nil.’ However, she quickly became an avid consumer of intelligence reports. When spending weekends at Chequers she would take not only the JIC’s weekly intelligence summary – the ‘Red Book’ – but also the raw data from which it had been compiled, and would return the papers heavily annotated. For Thatcher, according to Urban, ‘intelligence was like a hobby, something she often saved for the moments other people would have called free time.’ When John Major replaced her there was some relief among his advisers, for as one of them told Urban, ‘he was less sold on this particular drug.’

Thatcher referred openly to the intelligence organisations as her ‘secret services’, so encapsulating their significance for her as a separate power base, outside the machinery of democracy – a technocracy to which she could appeal for support against unwanted pressure from the Foreign Office, Home Office or MoD. The direct influence of MI5, SIS and GCHQ was normally reduced by the mediation of the JIC, but Thatcher was careful to circumvent this by studying the raw reports in GCHQ’s weekly ‘Blue Book’ and the SIS’s ‘CX Book’. By using these tactics she was able to circumvent her policy advisers, and it is not surprising that during her years as prime minister spending on the secret services more than doubled. Nigel Lawson, her Chancellor from 1983 to 1989, acknowledged that this was ‘one of the very few areas of public life virtually untouched by the rigours of the Thatcher era’.

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Vol. 20 No. 3 · 5 February 1998

A few of Nicholas Hiley’s points (LRB, 11 December 1997) about MI5’s interwar history are debatable. Hiley says that MI5 ‘recruited Maxwell Knight, later Director of Intelligence of the British Fascists’. John Hope, the historian who has done most to investigate Knight’s role in the British Fascists, has claimed that he was already the Fascists’ Director of Intelligence when he joined MI5 in the mid-Twenties. In fact, while there is solid evidence that for several years Knight was both a senior Fascist and an employee of MI5, beyond this the picture is less clear than Hope has suggested. On the other hand, the evidence that has so far emerged is not incompatible with Knight’s having become the Fascists’ Director of Intelligence at the same time as, or shortly after, he joined MI5. Hiley also says that Knight was recruited by MI5 ‘to head its counter-subversion unit’. However, Knight’s biographer, Anthony Masters, believes that Knight did not become MI5’s head of counter-subversion until the late Thirties, when he was appointed to run a newly-created unit which came to be called B5(b).

Hiley further writes that in 1927 MI5 sent ‘Joseph Ball, who had been conducting black propaganda against the Labour Party, to become Director of Publicity at Conservative Central Office’. What has been firmly established is that after Ball resigned from MI5 at the beginning of 1927 he became the first Tory spin doctor, deploying various dirty tricks against the Labour Party. The historians John Ferris and Uri Bar-Joseph have speculated that Ball may in fact have been working simultaneously for the Tory Party and MI5 since as far back as 1924. In any case he is a prime suspect in the leaking of the Zinoviev Letter, the attempt to damage the Labour Party’s chances in the 1924 election. As regards the statement that MI5 actually sent Ball to work at Tory Central Office, this sounds plausible, but to my knowledge nobody has ever claimed that it was the case.

It is clear that much remains unknown about the cases of Knight and Ball, which, as Hiley indicates, belong to a distinct pattern of right-wing bias in the organs of the secret state. Doubtless the archives of MI5 could fill in a lot of the blank spaces that remain in this story, but they are to be exempted from the proposed Freedom of Information law and MI5’s records policy is determined by considerations other than openness. As part of its continuing public relations offensive, MI5 recently released the first ever batch of material from its archives, covering the period 1909-19; this turned out to consist chiefly of censored versions of anodyne in-house histories. It is said that MI5 will be releasing material relating to the interwar period in late 1998 or in 1999. I have little expectation of finding the full truth about Max Knight and Joe Ball in these files.

David Turner
Borden, Kent

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