The intelligence agency GCHQ – and former Chancellor George Osborne – have been heavily criticised for emphasising “image rather than cost” in the choice of a new headquarters for the National Cyber Security Centre (NCSC).
A report from the Intelligence and Security Committee (ISC) described the 2016 process as “unacceptable”.
The committee said Mr Osborne over-ruled the government’s national security adviser’s very strong advice to reject Nova South, near Westminster, in central London.
The shortfall of money that resulted – almost £3m per year – has had to be taken out of GCHQ’s budget and could have been used for operations, the committee added.
In November 2015, Mr Osborne announced plans for what would become the NCSC, which was launched the following October.
Formed out of GCHQ, its mission was to protect the country in cyberspace.
Rather than being based out in Cheltenham with the rest of GCHQ, the decision was made to locate it in London where it could be more accessible and open to business and government.
But the decision to choose the expensive Nova South building, near Victoria station, has been heavily criticised by the ISC.
Even though Canary Wharf came out top of the shortlist, Nova South was recommended by GCHQ to National Security Adviser Mark Lyall Grant.
That was based on proximity to Westminster and also the fact Canary Wharf would be “very unpopular” with GCHQ staff.
Mr Lyall Grant rejected the recommendation as not giving value for money – but in May 2016, then-Chancellor Mr Osborne overruled him and decided on Nova South.
The ISC criticised the entire process. It said locations out of London were not considered, there was an “unusual” emphasis on “high-quality” accommodation and late changes in criteria, including cost-factors being removed.
Nova South ended up much more expensive than other options and staff were not even able to move in at the time of the official launch, an “arbitrary date” that had been set.
The result was a project which “considerably over-shot the funds originally allocated”.
The ISC said this led to other areas of GCHQ’s spending being cut and a long 15-year lease coming into operation.
The report was the result of inquiries under the previous chair and committee, but is being published now by the new committee, formed after the general election.
Two members of the ISC – Kevan Jones and Stewart Hosie – served on the previous committee.
In a joint statement, they said: “The role of ministers in the process as a whole was highly unsatisfactory.”
The MPs also said GCHQ appeared to think the then-chancellor viewed Nova South as a “pet project”, although the intelligence agency’s own preferences played an equally strong part.
In 2019, GCHQ revealed that it had used a drab office block in a London back street as a secret base for 66 years.