MI5 is contacted by Soviet university professor Arkady Malinov (Marcel Iureș), who reveals he is a KGB sleeper agent working undercover in the United Kingdom.
Daddy assembles a team to look into Operation Glass, including Joe; the ambitious civil servant Bobby Waterhouse (Paul Ritter); field agent and analyst Sarah Montag (Victoria Hamilton); her husband, Alan (Jonathan Aris), who is a bugging expert; and Daddy's secretary, Wendy (Chloe Pirrie).
However, Joe discovers evidence that the MI6 agent was framed, Alan realizes the technical plans have been largely faked and the team comes to the conclusion that Operation Glass was an overly elaborate feint by the Soviets.
As Joe and Jim Fenchurch begin investigating the possibilities of who might be the mole in MI5, they get a tip from the police about a former Army officer called Philip Denmore, who has been enlisting the IRA for help in building a bomb.
Joe recognises it as the street outside of the Conservative Party headquarters and rushes to the scene, but arrives too late to prevent the detonation by a suicidal Denmore.
Suspecting a plant, Bobby orders Wendy to look for other officials in the government who have mysterious and unexplainable gaps in their record, as well as former known radicals who inexplicably disappeared at coinciding times.
Daddy is furious at this fresh betrayal and the authorities attempt to arrest Joe, but he escapes and goes on the run, aided by Sarah, who encourages him to seek out Odin.
Before he went on the run, Wendy had told Joe she had discovered an audio tape where a drunk Soviet agent brags openly about knowing Phoenix.
When Joe listens to the tape, he discovers that not only the name but also the pronouns referring to this person have been removed; he deduces that what's missing are all instances of "her" and "she", meaning that Sarah is the mole and Alan has only confessed to cover for her as he still loves her.
When Joe confronts Sarah, she tells him that Yulia is still alive in KGB custody and that if he wants to see her, he should report to a given address — Daddy will never believe she is the real Phoenix anyway.
Wendy and Bobby reveal to Daddy that they have discovered a dozen highly placed figures in government who lack any early history and have names taken from dead infants, indicating they are potential Soviet moles.
Odin has a gun to her head and Joe's prints are put on the sniper rifle — but it is not the PM who arrives outside at the bombing site, but Jim.
Other locations include Birmingham Moor Street railway station, Warstone Lane Cemetery, Cannon Hill Park, the Old Rep, Grand Hotel, Moseley Road Baths, Methodist Central Hall, Merevale Hall, Lickey Hills, the canals in Smethwick, Newhall Street, and the Birmingham old Central Fire Station.
"[1] Brian Cox, who plays Daddy, said that "the rich character-driven storylines were a real draw and really capture the intense feeling of the cold war period.