Spies breached government accounting procedures to build new headquarters

The reports reveal that costs spiraled out of control and that Margaret Thatcher, Prime Minister at the time, was not kept informed of the rising expenditure.

The final cost for Vauxhall Cross, the MI6 building featured in recent James Bond movies, and Thames House for MI5, rose to £548m, up from estimates that originally totaled £250m.

The newly released reports were produced in 1993 and 1995 and include a report from the then chairman of the Public Accounts Committee Robert Sheldon.

For the MI5 building Thames House money was paid up front to gain a discount well before the legal transfer of the property had taken place.

A measure which Robert Sheldon described as ‘taking special accounting treatment too far’ and in breach of procedures.

He adds his ‘alarm’ that the cost of refurbishing the building rose from £60 to £259, a hike Margaret Thatcher did not learn of until July 1990, three years after the initial estimate.

He described payment for the Vauxhall MI6 building ‘before a brick has been laid’ as ‘not normal’ and an ‘unnecessary risk with public funds’.

The buildings were bought by the government in 1988 and 1989 after protracted negotiations.

Criticisms include a failure to take early opportunities to buy the property at cheaper levels and the lack of proper surveys. The cost of Thames House was initially estimated as low as £75m but a deal was eventually signed for £82m.

David Davis, the current chairman of the PAC added his weight to criticism of the property deals.

‘The decision to pay quickly and in advance raised serious issues of value for money,’ he said and described the dearth of information to Margaret Thatcher as ‘plainly improper behaviour’.

He added: ‘Secrecy was allowed to cover massive cost overruns. In my view, the secrecy surrounding these projects created a greater obligation on the part of those responsible to secure value for money. A duty they plainly failed to fulfil.’

MI5: The Security Service

The National Audit Office

Related reading