Sure. It's also a great way to get around domestic wiretapping laws. Assuming you can cooperate well enough with a foreign power, you can have a "I'll show you yours if you show me mine." sort of situation.
In all seriousness, the spying may not be as hardcore or blatant(!) as say US/China or US/Russia but they are not looking for the same kind of intel between US/UK. I wuold be very very surprised if there was not some intel gathering at some level.