Poor Grace is torn.
Lance is the only true friend she has made since she came to Essex. However, now she has to keep information from him, and in a way she is lying by omission. Grace hates herself, especially when she has to comply with what her boss Colin is requesting. The man is really disagreeable, and his attitude towards this is reprovable. His dismissive comments about Lance and his relationship with Peter, and even the expression of almost amusement that Grace notices are really disgraceful.
Then Lance calls Grace, telling her that someone has been in his flat as he has noticed some things have been moved. Grace knows that it could well be true and the MI5 or the unit Peter had been working for must have sent someone to spy on Lance. Yet, Grace has to plant the seed of doubt in his mind and she hates herself for that. In the end, Lance decides not to report the break-in because now he is not sure, and Grace suggests he could go away as Duncan had told him to do. I am intrigued who Peter really was and what he was after.