Sir William Strang was one of Britain’s most senior wartime diplomats, trusted to represent the nation at the negotiations about the future shape of post-war Europe. He was a pillar of the British establishment.

And like many pillars of the establishment in the 1930s and 1940s, he was deeply antisemitic.

“Strang said that he personally hated the Jews,” a 1943 MI5 report read, “and regarded the Bolshevists and the Jews as the two great enemies of all that was decent.”

That this man was appearing in an MI5 report at all was surprising. Until that point, Strang had been more likely to write a top secret document than feature in one. What was even odder was that the author was Victor, Third Baron Rothschild, Britain’s leading Jew.

At the time, Rothschild was running MI5’s counter-sabotage department. This mainly meant taking apart live bombs to understand how they worked. But he had another project on the side, one that was secret even within MI5. It is only now told in full for the first time in my book Agent Jack.

In the middle of the war, MI5 had hit an unexpected problem. After two years hunting for a Nazi Fifth Column — an organised network of traitors — they had concluded that there wasn’t one. But in the course of that hunt they’d kept meeting individuals who wanted to be Fifth Columnists. So Rothschild made a suggestion: if the Fifth Column didn’t exist, perhaps MI5 should create it.

In 1942, he asked Eric Roberts, one of MI5’s most effective undercover agents, to take the role of the Gestapo’s man in London. Under the alias ‘Jack King’, Roberts identified himself as a Nazi spy to one of his fascist contacts.

Within weeks he was building a network of eager recruits. Some had German or Austrian connections, but the bulk were ordinary Britons, working in offices and factories, taking their turn with civil defence duties, but secretly longing for defeat.

Some were tired of the war, some hated Churchill, but almost all had a common characteristic. “There are few, if any, of these people who are not antisemites,” an MI5 report said, “and it matters little if they became admirers of Nazi Germany and fell for its antisemitic propaganda, or whether they admire Germany solely because of her treatment of the Jewish problem. The result is the same.”

One woman, Dorothy Wegener, blamed Jews for dragging Britain into the conflict. “I utterly loathe and detest them, and I feel more than certain that the Jews and nobody else are purely responsible for this war,” she wrote.

Another, Eileen Gleave, “complained of the number of Jews residing in her block of flats.” Her friend Hilda Leech was simply “violently antisemitic”, and had a book on “Jewish ritual murder.”

Strang wasn’t part of Roberts’ Fifth Column network, but he was in contact with, possibly sleeping with, a woman who was. She passed his remarks on as an example of how even at the top of government there were those who shared some of the Nazis’ views.

The diplomat’s comments weren’t a one-off. A week after his first appearance in the files, there was a fresh report on him, revealing that he’d blamed Jewish pickpockets for starting a panic that crushed nearly 200 people to death.

Rothschild seems to have been at once furious with Strang and aware that he wasn’t unusual. “Many people in responsible positions”, he observed in an MI5 report, “spread antisemitism, not realising they are playing into the hands” of fascists.

Until I began researching my book, I confess I hadn’t given much thought to antisemitism at all. I had studied 1930s Germany at school and visited Auschwitz as a teenager and Yad Vashem a few years later but the Holocaust seemed to me so obviously horrific that it didn’t really require deep thought. Humanity has periodic fits of exceptional, collective wickedness, I concluded.

I think this is because, for non-Jews, the Holocaust is such a huge atrocity that it makes it difficult to properly grasp antisemitism. If you see hatred of Jews through the prism of Auschwitz, then antisemitism looks like smashed shop windows. It’s not easy to see how the everyday prejudice of Sir William Strang fits into that.

But MI5’s files show how the mundane antisemitism of many English people during the war could escalate into violence.

There was Irma Stapleton, who wanted to go into the street and shoot Jews “wholesale”. That was just talk, but Reg Windsor of Leeds acted. He described to Roberts his attempts to set fire to Jewish shops in order to help the Luftwaffe find his city and bomb it.

The files also reveal how, in a pre-internet age, Nazi sympathisers could find their own sources of alternative facts. “All, without exception, listen in to the German news bulletins, believe them and consider the BBC broadcasts as ‘democratic lying propaganda’,” an MI5 infiltrator reported.

Even when the British public learned of the horrors of the Holocaust, many in the Fifth Column stayed firm. Ronald Creasy, a wealthy farmer in Suffolk, had been a stalwart fascist for over a decade, and one of Roberts’ recruits. When he saw the film of Belsen, he was dismissive. Most of the people there were the “sweepings of the Polish ghettos,” he said. It was “sentimental nonsense” to suggest that these “Asiatic submen” deserved any better.

There were occasional signs of hope. Creasy’s wife, Rita, had been as keen a Fifth Columnist as her husband. But the Belsen film was a turning point. She told her husband that the Nazi regime was “rotten through and through.” To his horror, she said she hoped fascists would never come to power in Britain.

At the end of the war, Roberts had identified around 500 Nazi sympathisers, and had an inner core of around 20 who believed that he was a German spy and were passing him intelligence. That was a capital offense, but MI5 decided not to seek the prosecution of any of them.

Partly, this was self-protection: the Home Office had been unaware of Roberts’s activities. MI5 was also reluctant to damage the excellent sources of information it had inside British fascism. But it’s hard to escape the conclusion that part of the motivation was embarrassment: in 1945, nobody wanted to hear that many Britons hadn’t been loyal to King and Country.

Sir William Strang’s career was protected for the same reason. He would go on to head the Foreign Office, and then sit in the House of Lords, one of the great and the good. He never knew about his appearance in MI5’s files. If it bothered Rothschild, he didn’t record it. “All Jews almost everywhere learn to live with the mild sort of antisemitism which afflicts so many people, even the liberal-minded,” he wrote towards the end of his life.

But MI5’s silence came at a cost. It meant Britain could tell itself fascism and antisemitism were Continental, Germanic vices, not something that ever tempted honest, decent John Bull. This failure to recognise a true picture of ourselves still echoes.

Still, in 1945, Rothschild could enjoy the feeling of having had the last laugh on the fascists of the Fifth Column. They went to their graves believing they had spent the war working for Hitler. They never found out they’d spent it working for one of the country’s most famous Jews.

“Agent Jack: The True Story of MI5’s Secret Nazi Hunter” by Robert Hutton is published by Weidenfeld & Nicolson.