The handling of the case against Christopher Cash and Christopher Berry was at times "shambolic" and reforms are needed to prevent "similar issues" happening again, the cross-party committee of MPs and members of the House of Lords said in its report.
Ex-parliamentary researcher Cash and China-based Berry, both of whom deny wrongdoing, had been accused of passing secrets to Beijing between 2021 and 2023.
The inquiry was launched after the Crown Prosecution Service (CPS) dropped the charges against the two men in September, saying the government had failed to provide evidence that China was a national security threat.
The move just before the start of a scheduled trial prompted speculation and accusations of a cover-up.
The CPS said it dropped charges after the government's witness, deputy national security adviser Matt Collins, refused to describe Beijing as a "threat" to national security.
This meant the case could not continue according to the terms of the 1911 Official Secrets Act, under which the charges had been brought.
But the inquiry did not find proof of a "co-ordinated high-level" attempt to thwart the case or obstruct the prosecution.
- Remaining risks -
The Conservative opposition party had alleged that the government's national security adviser Jonathan Powell had pushed for the case to be dropped over fears that China could pull much-needed investment from Britain.
But Prime Minister Keir Starmer vehemently denied the accusations in parliament as "a red herring" and "completely scurrilous".
"People always want to try and find conspiracy in this," Matt Western, the chair of the inquiry, told the BBC.
"And really there was no sense that there had been any form of conspiracy or leaning on by government."
But the government and the CPS were both criticised for a process "beset by confusion and misaligned expectations".
"I think we found concerns, really across the piece, that there was poor communication between the government and the CPS," Western said.
"We think there's systemic failure through it. The whole process looks pretty shambolic."
The CPS could have raised its issues earlier and the government at times lacked clear processes to address matters, the report said.
The inquiry accepted that the "root cause" of the problems with the collapsed case lay in the difficulties with the "outdated" Official Secrets Act.
And it warned that legislation introduced in 2023 has not removed all of the risks, and the collapse of the case was not a "one-off peculiarity created solely by outdated legislation".
It recommended a number of reforms, including better communication between the government and CPS, and carefully considering what issues could occur if the prosecution relied on a single witness in a "diplomatically sensitive case".
UK govt again delays China embassy decision
London (AFP) Dec 2, 2025 -
Britain's government has delayed into the new year a decision on whether to allow China to build a sprawling and controversial new embassy complex in London, officials said on Tuesday.
A letter written to interested parties by the government department responsible for weighing the request showed that the housing minister has pushed the deadline back to January 20.
"We aim to issue the decision as quickly as possible," said the letter, released by the Inter-Parliamentary Alliance on China (IPAC).
Residents, rights groups and China hawks from across the UK political spectrum oppose the development, which, if approved, would become the largest embassy in the UK.
They fear the site could be used to surveil and harass dissidents.
A spokesman for Starmer suggested that "particular security implications" meant that more time was needed to consider the planning application.
"The Home Office and Foreign Office have provided views on particular security implications, and have been clear throughout that a decision shouldn't be taken until we affirm that those considerations have been completed or resolved.
"MHCLG (the Ministry of Housing, Communities and Local Government) considers that more time is needed for full consideration of the applications," he told reporters.
Housing minister Steve Reed had previously extended the deadline to December 10.
The decision is viewed as a key issue in Starmer's attempted reset of relations with China, which remain strained by accusations of spying and by tensions over the fate of Hong Kong, a former British colony.
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