This latest China spying bombshell could be the beginning of the end for Keir Starmer

Jonathan Powell shut down a major Whitehall probe into Chinese espionage following pressure from the Treasury, The Telegraph has reported.

Sir Keir Starmer's national security adviser made the call in June that the Government would bury details about spying from the Foreign Office's China audit, sources told the newspaper.

The bombshell decision arrived after Treasury mandarins warned that making public information from the "comprehensive" analysis of China's influence in Britain could wreck trade and investment links. The news emerges as Starmer's ex-top civil servant Simon Case wades into China spy fiasco over clear 'threat'.

The Prime Minister is now under fire to reveal the full extent of China's stranglehold on Britain. In a dramatic development earlier this week, the UK's top prosecutor said a case against two alleged spies collapsed because the Government had failed to brand the country a threat to national security.

The Express reached out to Number 10 Downing Street for comment.

Details of China grip deliberately hidden

The Telegraph has revealed intelligence gathered in the China audit, a cross-Whitehall analysis of Britain's relationship with Beijing, were deliberately kept private amid concerns about reprisals from China.

Dame Priti Patel, the shadow foreign secretary, said: "This is yet another example of cover-up and collusion within the Labour Government when it comes to foreign policy and China. Labour clearly cannot be trusted when it comes to national security."

During a trip to India on Thursday, the Prime Minister said no ministers had been involved in the decision to drop the trial of the alleged spies Christopher Cash and Christopher Berry last month.

The Labour leader did not deny that Mr Powell was involved, despite Downing Street previously insisting that he was not responsible for decisions about evidence in the case.

Mark Sedwill, Mr Powell's predecessor as national security adviser, said the decision to drop the case was "very hard to understand".

Labour's broken manifesto promise

Labour first promised an audit of its relationship with China in its election manifesto last year. Voters were told the report would "improve the UK's capability to understand and respond to the challenges and opportunities China poses".

Following Labour's election victory, the Foreign Office interviewed hundreds of witnesses between October 2024 and June this year to reveal a "full spectrum of threats" against the UK, including espionage and cyber attacks.

The probe included classified evidence from Britain's intelligence services, and was designed to provide a comprehensive document about China's activities in the UK that could be used across the Government.

David Lammy, the then foreign secretary, had promised that the investigation would be "comprehensive". MPs had expected the Government to release redacted details about the national security threat from China from the audit over the summer.

Treasury complaints kill publication

However, following complaints from the Treasury, Mr Powell decided that the report would instead be folded into his National Security Strategy (NSS), a separate document published in June, according to sources familiar with the process.

At publication, the strategy included just two paragraphs on the China audit. Mr Lammy gave a brief statement to the House of Commons that MPs criticised for leaving them "in the dark".

Alternative options for releasing details from the audit, including an executive summary that would have contained more detail about Chinese spying in Britain, were vetoed by the national security team in the Cabinet Office, it is understood.

The Government did not deny those claims, although a spokesman said specific details were redacted for national security reasons.

Whitehall has refused to publish expert evidence submitted to the China audit about how the UK should refine relations with Beijing, but has instead published responses on how it handled the process.

Experts demanded publication

Telegraph analysis of the 42 pieces of written evidence submitted in May showed that dozens called for the findings of the China audit to be published at least in part, with sensitive sections redacted.

Charles Parton, a former diplomat who had been due to give evidence in the collapsed spies trial, said in a submission about the audit that it should lead to a published China strategy.

"Openly publishing the strategy is important: business, academia, society in general - and the Chinese - need to know where the UK stands in its relations with China," he said.

Mr Powell's National Security Strategy recommended that the UK pursue "direct and high-level engagement" with China to create a "reciprocal and balanced economic relationship".

MPs left in the dark

Mr Lammy also made a statement to MPs on the China audit on June 24, saying that it was "no choice at all" for the UK not to engage with Beijing since "Chinese power is an inescapable fact".

Parliamentary scrutineers on the foreign affairs committee slammed his statement for giving too little detail about the threat China poses to Britain.

Emily Thornberry, who chairs the committee, said in July that "Parliament and the public have been left with more questions than answers".

"At the moment we are operating in the dark," she said. "We understand the need for sensitive matters to be kept classified, but the Government must get the balance right."

Chinese officials met Powell day before statement

The Telegraph reported that Mr Lammy's statement came a day after senior Chinese Communist Party officials met Mr Powell and UK business leaders in Whitehall.

Yuan Jiajun, a senior member of the party politburo, led a Chinese delegation to Britain to meet Mr Powell on June 23, and also attended a round table at the Chinese embassy with the leaders of 48 UK companies.

The Chinese embassy said in a newsletter that the visit was made "at the invitation of the British government", adding that "the British side" said during discussions that "the UK-China relationship is of strategic importance".

Mr Yuan, who is also the communist party secretary of China's Chongqing municipality, promised during the meeting to leverage industry in his region to boost ties with the UK in manufacturing, logistics and financial services.

Reeves held talks with Chinese vice premier

A fortnight earlier, Rachel Reeves, the Chancellor, Reeves met He Lifeng, China's vice premier, in Downing Street to discuss plans to strengthen the economic partnership between London and Beijing.

The Chancellor told her Chinese counterpart that "Britain attaches great importance to its co-operation with China and stands ready to inject new impetus into Britain-China economic cooperation", according to a report of the meeting on the Chinese government's website.

MPs suspect that the details of the threat to the UK from Beijing outlined in the China audit were deliberately hidden from the public to avoid a diplomatic spat with Xi Jinping, the Chinese president.

Audit prompted intelligence funding boost

The results of the investigation were enough to convince the Government to announce a £600m funding boost for the intelligence services, and prompted Mr Lammy to warn that Britain's "protections must extend more widely than they currently do".

Whitehall sources told The Telegraph that Mr Powell's decision came after the Treasury raised concerns that going public about the threat from China would scupper trade and investment opportunities, including trade talks that were planned for last month.

The revelation is likely to increase pressure on Downing Street to explain why Mr Powell, who is the Government's top national security official, was willing to withhold information about China from Parliament.

Luke de Pulford, a human rights campaigner and founder of the Inter-Parliamentary Alliance on China said Mr Powell's involvement in downplaying the China audit was part of a "growing rap sheet" that suggested he was too soft on Beijing.

Audit suppressed as spy trial collapsed

The limited release of the China audit came as officials were refusing to provide evidence to the Crown Prosecution Service that China was a "threat to national security", which had been requested for the trial of Mr Cash and Mr Berry.

Mr Powell reportedly chaired a meeting about the case shortly before it collapsed, although Downing Street denies that he had any involvement in the decision not to provide further evidence.

Stephen Parkinson, the director of public prosecutions, said on Tuesday that the case collapsed because key evidence about China was "not forthcoming" from the Government.

MPs have called on Sir Keir to "come clean" and explain why his officials were not willing to give further evidence about China to the court, while his position on the case has been questioned by two former Cabinet secretaries, and the former heads of MI6 and the CPS.

Starmer refuses to rule out Powell involvement

Sir Keir insisted on Thursday that ministers were not involved in the decision to drop the case. But he did not make the same assurances about Mr Powell.

Quizzed about whether ministers or Mr Powell had been involved, the Prime Minister said: "I can be absolutely clear then, ministers were not involved in any of the decisions since this Government's been in, in relation to the evidence that's put before the court on this issue.

"The evidence was [...] the only relevant evidence, and that evidence was the situation as it was under the last government, rather than this Government. You can only try someone on the basis of the situation as it was at the time of the alleged offence."

Downing Street sources later said Mr Powell was not involved in the decision.

Jonathan Hall, the Government's counter-terror watchdog, told LBC that he believed the public deserved "a much fuller explanation" of what had happened.

Government cites national security

A Government spokesman said the China audit was not published in detail because much of its content was classified.

"In June we published a summary of the audit, which was conducted at a higher security classification and consistent with our Five Eyes partners," the spokesman said. "The specific details of the audit could not be published without damaging our national security interests."