Running hot, standing still: the quiet crisis in Britain’s national security architecture

Bottom line up front

Britain’s Intelligence and Security Committee’s Annual Report 2023–2025 exposes a national security apparatus running close to the limits of its structural capacity just as threats from China, Russia and Iran intensify. Despite legislative updates and tactical operational successes, the Government has repeatedly favoured short-term economic stability and political convenience over the long-term investment and institutional reform needed to confront a genuinely coordinated whole‑of‑state challenge. That strategic inertia, coupled with the systematic erosion of parliamentary oversight and chronic recruitment shortfalls across every agency, now forces the UK to manage threats through crisis redeployments that cannibalise its wider security posture. At the current trajectory, the system will not collapse overnight. It is instead settling into a pattern of managed vulnerability, in which certain adversaries and particular risk vectors are tacitly treated as beyond the state’s capacity - or willingness - to address in full. 

A system running at the limits

What distinguishes this report from its predecessors is not the catalogue of new threats but the candour with which institutional leaders acknowledge that the system cannot meet all demands simultaneously. The Committee notes that recruitment shortfalls are now systemic rather than cyclical: the Joint Intelligence Organisation filled only 13 of 61 planned posts; GCHQ recruited 774 against a target of 1,131; MI5 managed 726 against 797; the National Security Secretariat reached 64 against 112. These are not marginal misses. They represent a structural incapacity that forces managers into permanent triage mode.

When the Ukraine war intensified following Russia’s 2022 invasion, GCHQ and Defence Intelligence surged substantial percentages of their workforce to the Russia theatre. That decision was necessary and right. It was also permanent. The agencies did not later backfill those positions from the recruitment pipeline that was already underperforming. Instead, coverage of other targets and priority areas quietly contracted. The report notes explicitly that major projects - such as the Defence Intelligence estate consolidation and RAF Digby modernisation - slipped during this period, even as Defence Intelligence and GCHQ were surging effort into the Russia-Ukraine theatre. This is not crisis management. It is a system revealing its actual capacity through what it has chosen to stop doing.

China: prosperity before security

Whitehall’s response to China remains the study most revealing of how political and economic considerations override security doctrine - a failure on which we have previously commented. The ISC’s 2023 China Report, published after a four-year inquiry beginning in 2019, is unambiguous: China’s state intelligence apparatus is almost certainly the world’s largest, operating under a whole-of-state model that co-opts companies, universities and individuals into espionage and economic infiltration. The Committee found that China has successfully penetrated “every sector of the UK's economy” through overt economic leverage, takeovers, mergers and supply-chain dependency, alongside covert intelligence operations.

The UK is not China’s top target - the United States holds that position - but it is high-value. It sits just below top priority, given the UK’s alliance with Washington, membership in multilateral bodies and role as an opinion-former. Yet Whitehall’s institutional response has been fragmented and slow. Until recently, intelligence agencies did not even consider Chinese interference a core part of their remit, focusing instead on covert activity. The overt aspects - investment screening, academic partnerships, corporate board infiltration - fell to policy departments that lack both specialist expertise and the resources to understand the threat. When the then ISC Chairman acknowledged the Government’s September 2023 response to the China Report, he noted pointedly that policy development had been “glacial”. This was not diplomatic language. It was the measured indictment of a committee constrained by classification, left to watch systemic failure unfold behind closed doors while ministers insisted everything was in hand.

The most revealing detail is the Government’s treatment of the Foreign Influence Registration Scheme (FIRS). This mechanism, introduced in the National Security Act 2023, allows the Government to designate entire foreign states to an “Enhanced Tier,” requiring the registration of persons conducting influencing activities on their behalf. In March 2025, the Government placed the entire Iranian state apparatus, including its intelligence services, into the Enhanced Tier. Russia followed in April 2025. China remains absent, despite the Committee’s explicit finding that Chinese interference poses an acute threat.

The Committee’s language is bound by professional restraint, but the implication is sharp. Officials acknowledge that “balancing the tension between security and prosperity requires dexterity and that there are a number of difficult trade-offs involved.” Stripped of euphemism, this means: the economic cost of designating China as an “Enhanced Tier” threat - and thus placing restrictions on Chinese state actors in the UK - is deemed too high. The Government is consciously accepting a known security vulnerability to preserve commercial relationships and diplomatic flexibility.

Iran: intensity without adequate tools

Iran presents a different profile of challenge. Here the threat is direct, personal and escalating. MI5 has reported multiple plots against UK-based dissidents, journalists and opposition figures. The Foreign Secretary has publicly confirmed “at least 15” credible threats of kidnap or assassination directed at Iran-linked targets since 2022. Iranian proxies, including criminal networks such as the Foxtrot Network, have conducted violence against Jewish and Israeli targets across Europe on the UK’s behalf, with the UK Government confirming and sanctioning the network in April 2025. Espionage operations continue. In 2025, Daniel Khalife - a former British Army soldier - was sentenced to 14 years and three months for espionage, terrorism and prison escape offences, including breaching the Official Secrets Act by passing sensitive military information to Iranian agents over several years, underscoring the persistent vulnerability of insider access.

The response has been firmer than on China: expulsions, sanctions and the March 2025 Enhanced Tier FIRS designation. Yet the Committee identifies critical gaps. The FIRS regime is narrow and complex; resources are insufficient; and the continuing absence of reform to the Official Secrets Act 1989 hampers prosecution of serious unauthorised disclosures and hostile-state collaborators.

Ministers had previously committed to reforming the 1989 Act - acknowledging that the current requirement to prove “damage” for certain disclosures creates a significant prosecution barrier, and that the maximum two-year sentence is inadequate for serious espionage. Yet when pressed during the Iran inquiry, the Home Secretary shifted ground entirely, stating flatly that there are “no plans” to reform the Act. This represents a worrying reversal of stated Government intent.

Russia and the costs of reprioritisation

Russia illustrates the zero-sum trade-offs inherent in a capped security budget. Following the Ukraine invasion, GCHQ and Defence Intelligence redeployed substantial proportions of their workforce to Russia and Ukraine-related work. This was militarily and strategically necessary. The UK’s public support for Ukrainian resistance and NATO solidarity required intelligence backing. Yet the redeployments also created holes.

The Joint Intelligence Organisation’s assessment output was, unsurprisingly, dominated by Ukraine throughout 2023–2025. Major projects elsewhere slipped. Coverage of non-Russia priorities contracted. The Committee notes that recruitment misses, particularly in vetting, meant these gaps could not be backfilled.

The language of official reporting obscures what has actually occurred. Agencies speak of “resourcing pressure” and “reprioritisation”. What this means in practice is that some threats, some regions, some technical capabilities are now being monitored at a lower intensity than security doctrine would prefer. This is not emergency management; it is policy. The state has rationed its security services and decided, implicitly, that certain risks will be carried.

Alongside the grinding war, Russia is testing the UK and its allies “in the grey zone” through cyberattacks on critical infrastructure, drones, sabotage and information operations that, in MI6 Chief Blaise Metreweli’s phrase, mean “the front line is everywhere”. Her description of operating “in a space between peace and war” is exactly the environment the ISC is trying to fund and staff for, but with a workforce model and capital programme still built for a clearer distinction between peace and conflict.

Terrorism: from disruption to triage

Counter-terrorism presents a superficially reassuring picture. Since the Westminster Bridge attack in March 2017, MI5 and police have publicly admitted to disrupting 43 terrorist plots. In 2023/24 alone, agencies disrupted one Islamist, two Extreme Right-Wing Terrorism and one Left-/Anarchist-/Single-Issue operations. The national threat level has remained at SUBSTANTIAL throughout the reporting period, yet headline attacks have been prevented.

Yet beneath the operational success sits a worrying institutional pattern. The threat landscape is shifting toward lone actors radicalised online, often motivated by a volatile mix of personal grievance and fragmented ideologies, accelerated by geopolitical events such as the Israel‑Gaza conflict and Ukraine war, and by high‑profile attacks like the December 2025 Bondi Beach massacre. The volume of low-signature, high‑consequence cases is growing faster than the agencies’ ability to handle them.

MI5 has missed recruitment targets, reaching 726 against 797. More tellingly, key capability projects have been paused or reshaped due to “affordability" concerns. Targeted Interception and Internet Connection Records (ICR) - technical capabilities that would allow investigators to track internet-dependent crimes and radicalisation more effectively have been re-scoped or delayed. When the Committee inquires why, officials cite funding constraints.

What this shows is not incapacity in the operational sense - the agencies remain able to disrupt plots - but a shift from proactive capability-building to reactive surge management. The system can still stop attacks when it detects them. It is less certain that it can monitor the full universe of potential attackers at the pace and scale the threat now demands.

Cyber and the deterrence deficit

Cyber threat reporting occupies an unusual space in the ISC analysis. Official descriptions are brisk and technically precise: states conduct persistent cyber espionage against UK critical national infrastructure; ransomware groups pose the most disruptive immediate threat; artificial intelligence is amplifying both capability and speed. Russia “almost certainly” intensified operations in support of Ukraine; China remains “highly sophisticated and capable”; Iran continues aggressive but less technically advanced intrusions.

Yet the report also notes, with quiet significance, that incident volumes remain high despite new tools and public attributions. GCHQ faces the same vetting and recruitment constraints as elsewhere; the report explicitly mentions “deliberate reductions in vetting targets because of resourcing pressures”. If deterrence were working - if public naming, new laws and diplomatic consequences were changing adversary calculus - one would expect to see either fewer incidents or adversaries shifting to less detectable methods. Instead, activity persists. This points toward either deterrence having reached its limit or adversaries being willing to accept the costs of attribution as the price of access to UK critical systems.

The Chief of MI6 has now made “mastery of technology” a core demand of her Service, arguing that advanced AI, biotech and quantum will “accelerate the pace and scale of every threat and opportunity” and that MI6 must be “as comfortable with lines of code as [with] human sources”. That vision sits uneasily alongside an ISC landscape of delayed interception programmes, reduced vetting targets at GCHQ and recruitment gaps across the community, where the ambition to excel in AI and data‑driven tradecraft is running ahead of the state’s willingness to fund and staff it at the necessary scale.

The emergence of commercial cyber tools available in the intrusion market means that technical sophistication is no longer confined to state actors. Less-regulated regimes are expanding the pool of available capabilities, and lesser-resourced threat actors can now acquire what previously required a state intelligence budget. This expansion has occurred faster than UK defensive doctrine has adapted to it.

The pattern holds across all threat domains: adversaries exploit not superior capability but institutional fragmentation. They move at the speed of intent while the UK responds through the friction of inter-agency coordination, budgetary constraint and democratic oversight—each individually necessary, collectively insufficient.

The private sector and managed scarcity

For private companies operating in UK national security and defence sectors, the report implies a fundamental shift: what were once supplemental contractor roles are now structural requirements. Defence Intelligence spent approximately £31 million on contractor support in 2023/24; the Homeland Security Group spent nearly £5 million. These figures do not capture the full extent of outsourced expertise, but they signal scale.

This reliance comes with chronic volatility. Procurement timelines are interrupted by sudden “affordability” reviews. Project scopes are re-written as agencies shift resources to the crisis of the month. Contractors should expect that what was promised for delivery in year two may be paused in year one if a new threat emerges or budget allocations shift.

The strategic implication for the private sector is to build modularity into service delivery and to anticipate that government budgets will remain tight. Long-term fixed-price contracts carry risk in this environment. More sustainable models will be those that allow cost flexing and enable rapid de-scope if emergency redeployment occurs. The state will continue to demand capability, but it will be less able to guarantee the funding consistency that sustained, multi-year projects require.

Additionally, firms should attend closely to compliance and supply-chain vetting standards. The threat from Chinese infiltration of technology supply chains is now a formal concern of the ISC itself. Contractors who cannot demonstrate robust vetting of overseas personnel and transparent supply chains will face higher friction in procurement and may find themselves excluded from classified work altogether.

Oversight: the democratic deficit widens

The most serious finding concerns the Intelligence and Security Committee itself. Since 2013, when the Committee’s remit was expanded to include the National Security Secretariat and Joint Intelligence Organisation - both Cabinet Office units - the Committee has faced a structural contradiction: it is supposed to oversee the Cabinet Office yet its own staff sit within the Cabinet Office, dependent on that same department for employment, pay and resources.

Successive governments promised safeguards to ensure ISC staff independence. Those safeguards have been “completely ignored”, according to the Committee. As a result, ISC staffing has been cut by over 40% and its budget by 23% since 2013, even as the organisations it oversees have roughly doubled in size. The Committee’s budget for 2025/26 has been reduced to c. £1.4 million on a headcount of 9 full-time equivalent staff - an allocation that the Committee judges to be fundamentally inadequate to its statutory responsibilities.

By contrast, the organisations overseen have grown substantially: the Joint Intelligence Organisation from just over 50 staff to 116; the National Security Secretariat from just over 100 to more than 233; the Homeland Security Group from just over 500 to 1,229. This is not mere resource drift. It is vast divergence between the size of the apparatus and the capacity of the body charged with scrutinising it on behalf of Parliament.

The Memorandum of Understanding defining the ISC’s remit has not been updated once in twelve years, despite repeated government commitments and statutory obligations. As a result, significant national security activity has migrated into policy departments and units that sit outside the Committee’s remit. The Investment Security Unit, for instance, was moved into the National Security Secretariat - which the ISC does oversee - yet scrutiny of the ISU remains with the House of Commons Business and Trade Select Committee, which lacks security clearances and secure facilities to handle classified material.

This is a constitutional failure. As the state expands its intrusive powers through the National Security Act and the Investigatory Powers Amendment Act, parliamentary scrutiny is weakening rather than strengthening. The Committee notes that it has been “increasingly constrained” in its ability to exercise independent oversight, and that without sufficient resources and properly updated remit, it cannot provide the assurance that the heads of intelligence agencies themselves cite as their “licence to operate”.

In May 2024, the Committee determined that the solution was to establish an independent office - a body corporate linked to Parliament rather than embedded in the Cabinet Office. The previous Government asked officials to work on this but made no progress before dissolution. The new Government has reopened discussions, though it appears amendment to the Justice and Security Act 2013 will be required.

Legislation: safeguards against government overreach

Where the ISC has had measurable impact is on the substance of legislation itself. On the Investigatory Powers Amendment Act 2024, ISC amendments secured three significant improvements. First, the “triple lock” - the requirement that Prime Minister, relevant Secretary of State and Judicial Commissioner all approve warrants targeting MPs or their communications - was protected against routine delegation. The Committee tightened the Bill to permit delegation only in genuinely exceptional circumstances (incapacity or inability to access secure comms), limited to no more than five named Secretaries of State, and subject to retrospective notification to the Prime Minister.

Second, on bulk personal datasets, the ISC secured expansion of the oversight regime to include annual reporting to the ISC itself on category authorisations, providing a measure of democratic scrutiny that the Government had initially resisted.

Third, on communications data, the Committee successfully pressed the Government to specify - on the face of the - bodies could recover access to this intrusive power, rather than allowing the Government to designate additional bodies by administrative action. Regulations amending the relevant schedule were laid in April 2025, after the reporting period.

These are significant safeguards. The National Security Act, by contrast, left critical issues unresolved. The Committee called for reform of the Official Secrets Act 1989, for stronger election interference provisions (including a requirement for UK political parties to disclose foreign donations), and for mandatory updating of the ISC’s remit. On each point, the Government initially resisted, then made partial concessions that the Committee judges inadequate. On the Official Secrets Act, the Government has now walked back its commitment entirely.

The international partnership multiplier

One genuine bright spot is the recognition that international partnerships, particularly with Five Eyes allies (US, Australia, Canada, New Zealand), act as a force multiplier that compensates for some domestic shortfalls. The Committee’s December 2023 International Partnerships Report found that while such relationships carry risks - partners operate under different legal and ethical constraints - they remain essential to modern intelligence work. The Committee noted that lessons have been learnt on the legal and compliance frameworks that govern such partnerships, with significant improvements in processes and procedures since prior periods.

This matters because it explains how the UK intelligence community has sustained operations despite budget constraints. What appears as a shortfall in domestic capacity is partially offset by the multiplier effect of allied intelligence sharing. Yet this dependency itself is a vulnerability. If Five Eyes partnerships were ever to fray - whether due to political change, disputes over burden-sharing, or divergent threat assessments - the UK system would face severe stress.

The structural tension beneath

What emerges from the report is not a system in acute crisis but one settling into a pattern of chronic over-extension masked by carefully measured language. The text speaks repeatedly of “pressure,” “affordability” and “reprioritisation.” Each of these terms signals trade-offs that officials have made but do not wish to articulate plainly.

Threats from China, Russia, Iran, terrorist networks and cyber actors are all intensifying at once. The UK’s political response has been to expand legal powers, pass new legislation and announce new strategies. Yet actual resources - personnel, budget, sustained technical capability - have either stagnated or been redirected from lower-priority areas to emergencies.

This is manageable in the short term. Agencies are still disrupting plots, generating strategic assessments and conducting operations. But as an enduring posture, it is untenable. Every redeployment to a new crisis leaves a gap. Every recruitment shortfall defers capacity-building. Every paused project leaves capability unrealised. At some point, the accumulation of deferred work and manageable gaps reaches a threshold where the system cannot respond to the next surprise.

The UK is not approaching that threshold imminently. But it is heading toward it and doing so with parliamentary oversight deliberately starved of resources and remit.

What this means for strategy

For ministers and officials reading this report, it raises an awkward question: if the threat is genuinely as serious as the intelligence community assesses, and if the resource envelope is capped, which threats is the UK willing to accept will not be fully covered?

• On China, the answer appears to be: sufficient to preserve economic relationships and diplomatic room for manoeuvre.
• On Russia, the answer is: limited further redeployment beyond Ukraine, accepting that some non-Russia priorities will receive reduced attention.
• On terrorism, the answer is: the system will continue to disrupt headline plots but will not build the structural capability to penetrate and monitor the full universe of potential attackers comprehensively.
• On cyber, the answer is: the UK will maintain a credible offensive and some defensive capability but will live with a persistent level of intrusion and espionage against critical infrastructure.

Silence does not make them less real. These are not stated choices; they are implicit in budgets, recruitment targets and project delays. But they are choices, nonetheless.

For an intelligence community that values candour and accountability, the honest course would be for officials to state this trade-off explicitly to ministers, for ministers to acknowledge it to Parliament, and for Parliament to decide whether the managed vulnerability is acceptable. The report edges toward this conversation but stops short of forcing it.

Conclusion: a system managing decline

At the time of writing, the UK is not in a state of intelligence collapse. It is, however, in a state of managed decline - a security apparatus that is running at or beyond its sustainable capacity while those responsible for it speak in careful language designed not to force difficult political choices into the open.

The Committee’s underlying message, read between the lines of restrained official language, is this: the system is holding together for now. Whether it will hold together ten years hence, if the threat backdrop remains as complex and the resource envelope remains as constrained, is a question to which the report does not provide an answer. But the logic of the evidence suggests that answer would be no.

The ISC, if it can secure genuine institutional independence and the additional resources Ministers have now promised, is arguably the body best positioned to force that conversation into the open. Whether successive governments will permit it to do so remains to be seen.