Episode starts with a recap of the last episode of series/season 2 which ended with Tom Quinn shooting Harry Pearce and then swimming out into the North Sea.
The new material opens with a scene of Harry Pearce being rushed to the hospital opens Tom Quinn is assumed to be dead (drowned in the North Sea), and is blamed for the death of the Chief of Defense (shot in the previous episode, the last episode of season 2). Meanwhile, the chairman of the Joint Intelligence Committee, Oliver Mace, sees this tragedy as the perfect opportunity to lay the ground-work for a merged single Ministry of Security with a political head and under the control of the government. He launches an investigation of MI5 and plans to “clean the stables” by firing everyone that worked for Pearce and forcing Pearce to retire (JIC believes that Tom’s co-workers helped him, and also suspect CIA agent Christine Dale, who is interrogated by Mace and by the CIA). Unfortunately for Mace, a note is slipped to Pearce, recuperating in a hospital bed, and he drags himself over to MI5 and removes the investigators. Apparently the investigators weren’t “going by the book”, so the investigation will continue, but “by the book” (in effect this means that the investigators cannot summarily dismiss all the MI5 employees in Pearce’s division, and cannot wander around their offices searching their documents).
After the investigators are kicked out, Adam Carter, of MI6, arrives to provide some help. He notes that the best defense is to prove Tom innocent. So the MI5 agents, and Carter, set out to prove his innocence. In the background, Tom himself is also wandering the streets, trying to prove his innocence by proving that Hermann Joyce, ex-CIA agent believed to be dead, was the shooter and set-up Tom.
Tom tracks down Hermann Joyce and delivers him to MI5 in a unique condition. Meanwhile, Mace forces Dale to meet Tom while wearing a wire (otherwise Dale would be tortured for months and thrown in prison). Mace’s group learns, through that wire, that the MI5 plan is to get Hermann Joyce’s wife, Carmen, to visit London so that they can get the proof of Tom’s innocence out of her.
When she arrives, MI5 track her by street cameras (CCTV) instead of direct tails as she is ex-CIA. MI5 plan to capture her at her hotel, but spot Mace’s people in the lobby, ready to lift her. MI5 agents intercept Mace’s people so that Carmen can get away. They’ll capture her later.
Luckily for the MI5 team, Carmen has climbed into a MI5 cab (as Ruth notes, it is a lot cheaper to get some cab drivers to snoop for them, than to hire more agents, or have agents drive around in fake cabs). The cab drives to the Joyce safe-house and Carmen causally heads upstairs to the safe-apartment-room. MI5 agents loudly occupy the next door apartment (Carmen doesn't hear them), and then drill a hole into her apartment to push a fiber-optic cable through (again, she doesn't notice). MI5 agents then sit in that room and watch Carmen.
Meanwhile, out in the street, Tom wanders up and bangs on the MI5 truck door. He is let in and eventually demands to be the one to go up to capture Carmen. Harry overrules him and sends Adam Carter instead.
Adam Carter knocks on the door and is let in. He is immediately knocked to the ground and a gun is pressed to his head. Carmen demands to know who he really is, and Adam Carter obliges by noting that he is in fact an agent of the secret service. They then have a nice chat where-upon Adam reveals that Hermann is dead and in fact so is Tom Quinn. Adam also notes that good spies don't let themselves get caught, then pointedly looks at her gun. She picks up the idea. After some more talking, she eventually picks up the gun and shoots herself.
Episode ends with Tom telling Adam that Harry was right, Adam did a better job than he could have done.
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Warning: Spooks season 3 episode 1 guide may contain spoilers