The extent of Chinese spying carried out on UK parliamentarians has been unveiled after evidence in the collapsed China spy trial was published.

Three witness statements from the government were released late on Wednesday night amid confusion surrounding why the prosecutions fell apart.

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Former parliamentary researcher Christopher Cash, 30, from Whitechapel, east London, and teacher Christopher Berry, 33, from Witney, Oxfordshire, were charged with passing politically sensitive information to a Chinese intelligence agent between December 2021 and February 2023. They have both denied the allegations.

In a statement after the government published the statements, Mr Cash reiterated he was “completely innocent”.

The collapse of the trial, meaning he can’t prove it, has put him in an “impossible position”, he said.

“At no point did I intentionally assist Chinese intelligence,” he added.

What does the government’s evidence say?

In the documents, it was revealed information about internal Tory politics – when the party was in government – was being fed to a Chinese intelligence handler known as “Alex”, according to counterterrorism command SO15.

They were written by Matthew Collins, the deputy national security adviser, who has been in post the whole time.

This includes Mr Cash working as a researcher and “directly contributing to the policy advice being provided to Rishi Sunak”.

The evidence adds: “It is axiomatic that this is prejudicial to the safety or interests of the UK for the Chinese state to have indirect access to one of the individuals providing policy advice to the now prime minister on China, with the potential to influence that advice.”

Mr Cash described the witness statements as “completely devoid of the context that would have been given at trial”.

‘Enemy’ status?

The prosecution of Mr Cash and Mr Berry collapsed in the past few weeks – with the director of public prosecutions saying it had not received enough evidence from the government to proceed.

This related to whether China could be considered an “enemy” under the Official Secrets Act 1911.

In the most recent document from Mr Collins, dated 4 August this year, he quotes the Labour manifesto in saying the government position, saying: “It is important for me to emphasise, however, that the UK government is committed to pursuing a positive relationship with China to strengthen understanding, cooperation and stability.

“The government’s position is that we will co-operate where we can; compete where we need to; and challenge where we must, including on issues of national security.”

While the statements repeatedly highlight the “threat” of China to the UK, they also speak of the importance of the trading relationship, and do not use the word “enemy”.

The publication of the documents comes after Prime Minister Sir Keir Starmer confirmed he would do so in parliament at Prime Minister’s Questions (PMQs).

The prime minister had previously said the government would not publish the evidence as it would not have been allowed by the CPS – before the CPS then denied this was the case.

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Speaking at PMQs, Sir Keir said: “Last night, the Crown Prosecution Service clarified that, in their view, the decision whether to publish the witness statements of the DNSA [deputy national security adviser] is for the government.

“I have therefore carefully considered this question this morning, and after legal advice, I have decided to publish the witness statement.”

Opponents of the government have accused it of deliberately collapsing the trial – something Downing Street has denied.

Stephen Parkinson, the head of the CPS, said in a statement the prosecution was dropped after attempts to get more evidence from the government “over many months” proved unfruitful.

Rachel Reeves faces the prospect of another “groundhog day” unless next month’s budget goes further than plugging an estimated £22bn black hole in the public finances, according to a respected thinktank.

The Institute for Fiscal Studies (IFS) said there was a “strong case” for the chancellor to substantially increase the £10bn headroom she has previously given herself against her own debt rules, or risk further repeats of needing to restore the buffer in the years ahead.

It said Ms Reeves could bring the cost of servicing government debt down through ending constant chatter over the limited breathing space she has previously given herself, in uncertain times for the global economy.

The chancellor herself used an interview with Sky News this week to admit tax rises were being considered, and appeared to concede she was trapped in a “doom loom” of annual increases.

What is the chancellor facing?

Speculation over the likely contents of the budget has been rife for months and intensified after U-turns by the government on planned welfare reforms and on winter fuel payments.

The Office for Budget Responsibility’s determination on the size of the black hole facing Ms Reeves could come in well above or below the IFS estimate of £22bn, which includes the restoration of the £10bn headroom but not the cost of any possible policy announcements such as the scrapping of the two-child benefit cap.

Economists broadly agree tax rises are inevitable, as borrowing more would be prohibitive given the bond market’s concerns about the UK’s fiscal position.

Long-term borrowing costs have recently stood at levels not seen since the last century.

What are her tax options?

While there has been talk of new levies on bank profits and the wealthy, to name but a few rumours, the IFS analysis suggests the best way to raise the bulk of sufficient funds is by hiking income tax, rather than making the tax system even more complicated.

Earlier this week, it suggested reforms, such as to property taxes, could raise tens of billions of pounds.

But any move on income tax would mean breaking Labour’s manifesto pledge not to target the three main sources of revenue from income, employee national insurance contributions and VAT.

She is particularly unlikely to raise VAT, as it would risk fanning the flames of inflation, already expected by the International Monetary Fund to run at the highest rate across the G7 this year and next.

Business argues it should be spared.

The chancellor’s first budget, which raised taxes by £40bn, has been blamed by the sector for raising costs in the economy since April via higher minimum pay and employer national insurance contributions.

They say the measures have dragged on employment, investment, and growth.

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‘A situation of her own making’

Analysis by Barclays, revealed within the IFS’s Green Budget, suggested inflation was on course to return to target by the middle of next year but that the UK’s jobless rate could top 5% from its current 4.8% level.

Ms Reeves, who has blamed the challenges she faces on past austerity, Brexit and a continuing drag from the mini-budget of the Liz Truss government in 2022, was urged by the IFS to not harm growth through budget measures.

IFS director Helen Miller said: “Last autumn, the chancellor confidently pronounced she wouldn’t be coming back with more tax rises; she almost certainly will.

“For Rachel Reeves, the budget will feel like groundhog day. This is, to a large extent, a situation of her own making.

“When choosing to operate her fiscal rules with such teeny tiny headroom, Ms Reeves would have known that run-of-the-mill forecast changes could easily blow her off course.”

Ms Miller said there was a “strong case for the chancellor to build more headroom against her fiscal rules”, adding: “Persistent uncertainty is damaging to the economic outlook.”

‘No return to austerity’

A Treasury spokesperson responded: “We won’t comment on speculation. The chancellor’s non-negotiable fiscal rules provide the stability needed to help to keep interest rates low while also prioritising investment to support long-term growth.

“We were the fastest-growing economy in the G7 in the first half of the year, but for too many people our economy feels stuck. They are working day in, day out without getting ahead.

“That needs to change, and that is why the chancellor will continue to relentlessly cut red tape, reform outdated planning rules, and invest in public infrastructure to boost growth – not return to austerity or decline.”

The budget is scheduled for 26 November.

The Government has vowed to pursue a company linked to Baroness Michelle Mone for millions of pounds paid for defective PPE at the height of the COVID pandemic after a High Court deadline passed without repayment.

Earlier this month, the High Court ruled that PPE Medpro, a company founded by Baroness Mone’s husband Doug Barrowman and promoted in government by the Tory peer, was in breach of contract and gave it two weeks to repay the £122m plus interest of £23m.

In a statement, the Health Secretary Wes Streeting said: “At a time of national crisis, PPE Medpro sold the previous government substandard kit and pocketed taxpayers’ hard-earned cash.

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“PPE Medpro has failed to meet the deadline to pay – they still owe us over £145m, with interest now accruing daily.”

It is understood that is being charged at a rate of 8%.

“We will pursue PPE Medpro with everything we’ve got to get these funds back where they belong – in our NHS,” Mr Streeting concluded.

Earlier a spokesman for Mr Barrowman and the consortium behind the company said the government had not responded to an offer from PPE Medpro to discuss a settlement.

“Very disappointingly, the government has made no effort to respond or seek to enter into discussions,” he said.

During the trial PPE Medpro offered to pay £23m to settle the case but was rejected by the Department of Health and Social Care.

While Mr Barrowman has described himself as the “ultimate beneficial owner” of PPE Medpro, and says £29m of profit from the deal was paid into a trust benefitting his family including Baroness Mone and her children, he was never a director and the couple are not personally liable for the money.

PPE Medpro filed for insolvency the day before Mrs Justice Cockerill’s finding of breach of contract was published, and the company’s most recent accounts show assets of just £666,000.

Court-appointed administrators will now be responsible for recovering as much money as possible on behalf of creditors, principally the DHSC.

With PPE Medpro in administration and potentially limited avenues to recover funds, there is a risk that the government may recover nothing while incurring further legal expenses.

In June 2020, PPE Medpro won contracts worth a total of £203m to provide 210m masks and 25m surgical gowns after Baroness Mone contacted ministers including Michael Gove on the company’s behalf.

While the £81m mask contract was fulfilled the gowns were rejected for failing sterility standards, and in 2022 the DHSC sued. Earlier this month Mrs Justice Cockerill ruled that PPE Medpro was in breach of contract and liable to repay the full amount.

Mr Barrowman has previously named several other companies as part of the gown supply including two registered in the UK, and last week his spokesman said there was a “strong case” for the administrator to pursue them for the money.

One of the companies named has denied any connection to PPE Medpro and two others have not responded to requests for comment.

Insolvency experts say that administrators and creditors, in this case the government, may have some recourse to pursue individuals and entities beyond the liable company, but any process is likely to be lengthy and expensive.

Julie Palmer, a partner at Begbies Traynor, told Sky News: “The administrators will want to look at what’s happened to what look like significant profits made on these contracts.

“If I was looking at this I would want to establish the exact timeline, at what point were the profits taken out.

“They may also want to consider whether there is a claim for wrongful trading, because that effectively pierces the corporate veil of protection of a limited company, and can allow proceedings against company officers personally.

“The net of a director can also be expanded to shadow directors, people sitting in the background quite clearly with a degree of control of the management of the company, in which case some claims may rest against them.”

A spokesman for Forvis Mazars, one of the joint administrators of PPE Medpro, did not comment other than to confirm the firm’s appointment.