Britain's parliamentary crisis threatens our security for two main reasons.
First, our entire security architecture is built on the fact that we are a mature parliamentary democracy whose power and authority is derived from those who are elected by us to make the laws by which we conduct ourselves. If those who make our laws cannot tell the difference between right and wrong, they undermine our system from within. MI5, famously, keeps away from what MPs do (as long as there is no terrorist threat involved). Maybe this wasn't as helpful as it thought. The misconduct of some MPs and Peers has clearly been going on for several years. MI5 should have been alert to this, if only because of the danger of blackmail that it posed (particularly strong where MPs become Ministers, and critical when they become Ministers is areas of security concern). If Parliament cannot function in the right way, then our system collapses (many would say it is already beginning to show signs of doing this). If our system fails, or if our MPs are widely discredited, it is only the enemies of parliamentary democracy who are the winners. The political history of Europe in the 20th century provides many examples of how the extreme right and left gained from the discrediting of parliamentary democracy.
If the governance of the UK has not broken down entirely this is partly due to the fact that so much of what makes this country work is now decided in Brussels. For some this has helped cause the problem on the grounds that there is actually not enough real work for MPs to do. For others it's good news that at least something is working somewhere.
The second reason this crisis threatens our security is because our security architecture properly relies on its total lawfulness. What is lawful and proper is defined by MPs (and Peers) and is a matter of their judgement. If their judgement is seen as flawed and faulty, as is plainly the case over Parliamentary allowances and expenses, then the laws they make are also likely to be seen as flawed and faulty. This will make it harder to combat extremism and terrorism and also harder to confront radicalisation. Certain Ministers have plainly got to step aside because of this.
In earlier decades, we could rely on an alert Security Service to warn political leaders when there was serious misconduct afoot. This was frequenty done by approaches from MI5 to the Whips. Today's Security Service will not have known about how the allowances system could be abused because they would have kept well away from the Palace of Westminister. Yet those making sure MI5 was not welcome there may have had their own motives for doing so.
In short, the crisis in which the UK now finds itself affects our security in a macro sense -- because what every decent citizen wants is a secure liberal democracy that allows our conflicts and problems to be solved in a rational, well-judged manner, avoiding crisis and meltdown. It also involves our security in a micro sense because it shows that so many MPs and Peers either have poor judgement or have acted disgracefully and even criminally.
It's true that the problems stemmed from a system of 'allowances' rather than 'expenses' - The Daily Telegraph which deserves great credit for exposing the wrongdoing has not always made the distinction as clear as it should be. That said Parliament's own rules do not make this clear: they refer to 'expenses' but not to allowances. What's more, those rules state specifically: 'such expenses should never be regarded as a substitute for pay'. Too many MPs were plainly using their 'allowances' to feather their own nests even going so far as to engage in property speculation, not to mention failing to pay capital gains tax.
The allowances granted had to be 'wholly, necessarily and exclusively' for carrying out MPs' 'parliamentary purposes'. It's hard to get clearer than that -- the list of abuses is now so well known it needs no listing here.
These are truly serious times -- for MPs and Peers certainly. But most of all for the Westminister system and the Mother of all Parliaments. Ensuring our system is secure from those who undermine it whether from without or within must now be our first priority.