The head of MI5 says he will “never back off” from confronting threats from China as he revealed his officers disrupted a case linked to Beijing in just the past week.

More broadly, Sir Ken McCallum said the number of people in the UK under investigation for “state threat activity” – also including from Russia and Iran – has jumped by 35% in the past year compared with the previous 12 months.

He admitted he felt frustration at the collapse last month of a trial against two British men accused of spying for China, but he stressed that the Security Service had still successfully derailed the alleged espionage operation.

With pressure mounting on Sir Keir Starmer over why the high-profile trial foundered, the director general of MI5 – choosing his words carefully given the controversy – confirmed that “Chinese state actors” pose a threat to UK national security “every day”.

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More broadly, he warned that the threat from states – also including Russia and Iran – are escalating and becoming as ugly as terrorism.

He used an annual speech at MI5’s headquarters in London to say:

• The wider threat from nation states is escalating and becoming as ugly as terrorism

• Attempts by states – principally China, Russia and Iran – to carry out operations involving violence, sabotage, arson or surveillance are “routinely” being uncovered

• MI5 has tracked more than 20 “potentially lethal” plots backed by Iran in the past year

• Russia is hatching a “steady stream” of surveillance plots with “hostile intent”, while MI5 officers take it as a working assumption that Russian trolls will attempt to exploit any particular “fissures” in UK society using online posts, though these efforts are largely unsuccessful

• On terrorism, MI5 and the police have disrupted 19 late-stage attack plots since 2020 and have intervened in many hundreds of developing threats

• There is growing concern about children becoming involved in terrorism, with one in five of the 232 terrorism arrests last year involving minors under 17

“MI5 is contending with more volume and more variety of threat from terrorists and state actors than I’ve ever seen,” Sir Ken said.

Declaring a “new era”, the MI5 boss warned of “fast-rising” state threats coupled with a “near record” number of terrorism investigations.

He said this was forcing the biggest shift in MI5’s mission since the 11 September 2001 terrorist attacks on the United States.

China is a particular challenge as the Starmer government seeks to bolster economic ties with Beijing, while also wary of the security threat posed by Chinese spies.

“The UK-China relationship is by its nature complex, but MI5’s role is not,” Sir Ken said.

“We detect and deal, robustly, with activity threatening UK national security.”

These threats range from cyber espionage; attempts to steal secrets from universities such as by cultivating academics; or efforts to target parliament and other parts of public life.

“MI5 will keep doing what the public would expect of us, preventing, detecting and disrupting activity of national security concern,” said the MI5 chief.

“Our track record is strong. We’ve intervened operationally again just in the last week and we will keep doing so.”

The spy boss continued: “I am MI5 born and bred. I will never back off from confronting threats to the UK wherever they come.”

The speech was delivered amid a growing row around a decision by Crown Prosecution Service (CPS) to drop the espionage trial of Christopher Cash, a former parliamentary researcher to two prominent Conservative MPs, and Christopher Berry, a teacher.

Both have denied any wrongdoing.

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Prosecutors said the government had not provided evidence that China represented a threat to national security, prompting allegations by the Conservatives that the prime minister’s team had interfered with the case to protect the UK’s trading ties with China.

Attempting to push back, ministers on Wednesday released written evidence by Matthew Collins, the deputy national security adviser, that was given to the CPS. It spelt out the threat posed by China and his assessment of the allegations against the two individuals.

Given the political storm, the MI5 director general was careful when responding to questions on the furore.

But he chose to voice his support for Mr Collins who he has worked with, describing him as a “man of high integrity and a professional of considerable quality”.

Sir Ken was asked by journalists if he had been frustrated at the failure to prosecute.

“Of course I am frustrated when opportunities to prosecute national security threatening activity are not followed through for whatever reason,” he said, though he noted not all cases that involve MI5 lead to prosecution.

“I would remind you all that in the particular case… the activity was disrupted.”

On whether he regarded China to be a threat, the MI5 chief said: “Do Chinese state actors present a UK national security threat? And the answer is of course yes they do every day.”

But he added that UK wider bilateral foreign policy on China is a matter for the government.

Rachel Reeves faces the prospect of another “groundhog day” unless next month’s budget goes further than plugging an estimated £22bn black hole in the public finances, according to a respected thinktank.

It comes as latest official figures showed the UK economy grew 0.3% in the three months to August, limited growth, despite the Treasury saying it is the fastest growth in the G7.

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The Institute for Fiscal Studies (IFS) said there was a “strong case” for the chancellor to substantially increase the £10bn headroom she has previously given herself against her own debt rules, or risk further repeats of needing to restore the buffer in the years ahead.

It said Ms Reeves could bring the cost of servicing government debt down through ending constant chatter over the limited breathing space she has previously given herself, in uncertain times for the global economy.

The chancellor herself used an interview with Sky News this week to admit tax rises were being considered, and appeared to concede she was trapped in a “doom loom” of annual increases.

What is the chancellor facing?

Speculation over the likely contents of the budget has been rife for months and intensified after U-turns by the government on planned welfare reforms and on winter fuel payments.

The Office for Budget Responsibility’s determination on the size of the black hole facing Ms Reeves could come in well above or below the IFS estimate of £22bn, which includes the restoration of the £10bn headroom but not the cost of any possible policy announcements such as the scrapping of the two-child benefit cap.

Economists broadly agree tax rises are inevitable, as borrowing more would be prohibitive given the bond market’s concerns about the UK’s fiscal position.

Long-term borrowing costs have recently stood at levels not seen since the last century.

What are her tax options?

While there has been talk of new levies on bank profits and the wealthy, to name but a few rumours, the IFS analysis suggests the best way to raise the bulk of sufficient funds is by hiking income tax, rather than making the tax system even more complicated.

Earlier this week, it suggested reforms, such as to property taxes, could raise tens of billions of pounds.

But any move on income tax would mean breaking Labour’s manifesto pledge not to target the three main sources of revenue from income, employee national insurance contributions and VAT.

She is particularly unlikely to raise VAT, as it would risk fanning the flames of inflation, already expected by the International Monetary Fund to run at the highest rate across the G7 this year and next.

Business argues it should be spared.

The chancellor’s first budget, which raised taxes by £40bn, has been blamed by the sector for raising costs in the economy since April via higher minimum pay and employer national insurance contributions.

They say the measures have dragged on employment, investment, and growth.

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‘A situation of her own making’

Analysis by Barclays, revealed within the IFS’s Green Budget, suggested inflation was on course to return to target by the middle of next year but that the UK’s jobless rate could top 5% from its current 4.8% level.

Ms Reeves, who has blamed the challenges she faces on past austerity, Brexit and a continuing drag from the mini-budget of the Liz Truss government in 2022, was urged by the IFS to not harm growth through budget measures.

IFS director Helen Miller said: “Last autumn, the chancellor confidently pronounced she wouldn’t be coming back with more tax rises; she almost certainly will.

“For Rachel Reeves, the budget will feel like groundhog day. This is, to a large extent, a situation of her own making.

“When choosing to operate her fiscal rules with such teeny tiny headroom, Ms Reeves would have known that run-of-the-mill forecast changes could easily blow her off course.”

Ms Miller said there was a “strong case for the chancellor to build more headroom against her fiscal rules”, adding: “Persistent uncertainty is damaging to the economic outlook.”

‘No return to austerity’

A Treasury spokesperson responded: “We won’t comment on speculation. The chancellor’s non-negotiable fiscal rules provide the stability needed to help to keep interest rates low while also prioritising investment to support long-term growth.

“We were the fastest-growing economy in the G7 in the first half of the year, but for too many people our economy feels stuck. They are working day in, day out without getting ahead.

“That needs to change, and that is why the chancellor will continue to relentlessly cut red tape, reform outdated planning rules, and invest in public infrastructure to boost growth – not return to austerity or decline.”

The budget is scheduled for 26 November.

A woman who accompanied her husband as he took his own life at the Dignitas clinic in Switzerland has been told by police she will not face criminal charges.

Louise Shackleton had been under investigation for assisted suicide since handing herself in to police after her husband Anthony’s death in December.

The 59-year-old had been battling motor neurone disease for years and Mrs Shackleton said they had discussed at length his decision to end his life.

In April, she told Sky News she accepted she had committed a crime but had no regrets over supporting her husband.

But North Yorkshire Police has now confirmed she will face no action.

In a statement the force said: “This has clearly been a complex and sensitive investigation which has required detailed examination by the Crown Prosecution Service.

“Whilst they concluded the evidential test had been met regarding assisted suicide, it was decided not to be in the public interest to prosecute.

“Our thoughts remain with Mr Shackleton’s family.”

‘We’re treated like criminals’

Mrs Shackleton told Sky News she was not surprised by the decision but was critical of the time it had taken.

“In reality, I didn’t commit a crime,” she said.

“The reality is I enabled my husband to get to a place he wanted to be, and to do what he wanted to do.

“I knew nothing would come of it because there was no coercion.

“I could have stopped him, but why would I do that? Why would I stop his will? He died like he lived, with dignity.

“The regret I have is other people are going to have to make this journey and be left in limbo like I’ve been left in.

“People shouldn’t have to go through this.

“In the darkest days of our lives, we’re treated like criminals and that is just unfair.”

Mrs Shackleton said she was sad her husband could not choose to die surrounded by his family in his own home.

She added: “It makes me dreadfully sad, and my heart aches that at least one person a week, just from England, is having to make that journey and their loved ones, in the deepest darkest part of their lives, are going to have to go through a police investigation.”

It has been legal to help someone die in Switzerland since 1942 – provided the motive is not “selfish”.

The country’s Dignitas group has become well-known as it allows non-Swiss people to use its clinics.

Will UK legalise assisted dying?

Mrs Shackleton has become a vocal supporter of legislation going through parliament to legalise assisted dying.

It would permit a person who is terminally ill and with less than six months to live to legally end their life.

The law in the UK currently prohibits people from assisting in the suicide of others, but prosecutions are rare.

Opponents to the assisted dying bill have raised concerns about the safety of vulnerable people and the risk of coercion and a change in attitudes toward the elderly, seriously ill and disabled.

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Mrs Shackleton chose to speak out publicly to honour a promise made to her husband to push for people to have choice, and believes he would be proud of her campaigning.

“People should have the right to a choice,” she said.

“I know people will say they don’t agree with that, that’s absolutely fine, I respect that, but because you don’t want something doesn’t mean you should stop someone else doing it.”

A final farewell

During the police investigation, she avoided opening her husband’s laptop in case it would have been needed as evidence. Since the investigation has been closed, she has opened that laptop and found the last letter her husband wrote to her.

“For nearly 10 months I’d been denied that letter, a letter that could have helped a lot,” she said.

“And I was denied it, and that’s wrong.”