
Kemi Badenoch slammed Labour's "ineptitude" over the China spy scandal and claimed ministers deliberately collapsed the case to "curry favour with the regime" in Beijing.
The Conservative leader warned that by failing to prosecute two alleged spies, the Government had told Britain's enemies they can get away with espionage.
And Mrs Badenoch claimed Labour's response to the crisis was to issue leaflets.
Former Security Minister Tom Tugendhat also accused Sir Keir Starmer's Government of creating "more straw men than a Russian disinformation campaign", adding that Labour's story was a "total fabrication".
The case against 30-year-old Christopher Cash, a former parliamentary researcher, and 33-year-old Christopher Berry, a teacher, was dropped last month after the Government failed to provide evidence designating China as a threat to national security. They both denied the charges.
And Security Minister Dan Jarvis revealed the government's deputy national security adviser - Matthew Collins - was given "full freedom" to provide evidence to the CPS.
He claimed neither ministers or the National Security Adviser, Jonathan Powell, had any input into the case.
But Tory leader Kemi Badenoch blasted Labour, telling MPs: " "This is about the ineptitude of the Government, and I cannot accept much of what he says. He's brought some updates to the House which we acknowledge, but in essence, China spied on this Parliament and they're issuing us with leaflets. This is not good enough.
"The CPS had what it felt was a clear and compelling case to prosecute.
"But the trial has collapsed because for months and months, the Government has been refusing to give the CPS vital information.
"This wasn't a mistake. This wasn't a misunderstanding.
"This looks like a deliberate decision to collapse the case to curry favour with the regime in China. And instead of admitting this, the Security Minister has come here blaming the Official Secrets Act.
"If the Government does not prosecute those who spy on us, it sends a message to the public that the Government does not care about their safety.
"It sends a message to our allies who share intelligence with us that Britain cannot be trusted.
"And it sends a message to those who spy on us that they can get away with it."
Mrs Badenoch, in a blistering attack, added in an emergency debate in Parliament: "Is it seriously the Government's argument that no minister knew anything about this until the trial collapsed?
"If this is the case, it is astonishing.
"But my suspicion is that it is not the case. My suspicion is that ministers did know.
"They have the Chinese super embassy in their in-tray.
"They have the billion pounds compensation conversation they are allegedly being asked to pay for nationalising British Steel.
"I suspect that they have decided that closer economic ties with China were more important than due process and our national security.
"And if this is the case, if that was the decision of this Government, then they should just tell us that and have the backbone to admit it.
"They should explain it to the public. They should explain it to the CPS, they should explain it to our international allies and let them all be the judge.
"There is nowhere to hide."
Security minister Dan Jarvis insisted that the Government did not withdraw or conceal any evidence in the case.
He added: "For days, the party opposite has been making baseless claims that this Government deliberately collapsed an independent legal process through political interference.
"There is not a shred of evidence to back up any of those accusations that she's made."
Mr Jarvis added that Ms Badenoch had said in September last year that she had previously "shied away from calling China a threat".
He said: "Every effort was made to provide evidence to support this case. The decision about whether to proceed with the prosecution was ultimately taken by the CPS, who were hamstrung by antiquated legislation that had not been updated by the previous Conservative government, despite the evolving nature of the state threats we face.
"The DPP (director of public prosecutions) has given his assurance that the CPS was not influenced by any external party, any member of this Government, nor any senior civil servant or special advisor working within it.
"Suggestions that the Government concealed evidence, withdrew witnesses or restricted the ability of witnesses to draw on particular bits of evidence, are all untrue."
And Mr Jarvis revealed that ministers and National Security Adviser Jonathan Powell were "not sighted" on the evidence, and that his deputy, Matthew Collins, was tasked with giving three witness statements to the CPS, most recently in July.
But an MP who was the boss of one of the men suspected of being a Chinese spy asked what measures the Government would be taking against the Chinese Community Party.
Conservative MP Alicia Kearns, who served as chairwoman of the foreign affairs select committee for two years until the election in July 2024 had hired Christopher Cash, said the case should have been put before a jury.
Ms Kearns went on to ask whether sanctions would be implemented, or the proposed mega-embassy in central London cancelled.
She said: "Given that the House has been told how disappointed the Government is by this outcome, what repercussions is the Government choosing to put on the Chinese Communist Party, given they seem to be quite clear that the guilt and the evidence is there."
Mr Jarvis said: "I'm sorry that she doesn't feel that the Government's response is adequate, but I will, and I give her this assurance, I will endeavour to ensure that this Government does as much as we possibly can to work with her ... to ensure that she can have the confidence that the matters that she's referred to aren't able to happen again."
Labour's Dame Emily Thornberry, the Chairwoman of the Foreign Affairs Select Committee, said a High Court ruling in the Bulgarian spy trial had made it easier to prosecute suspects in such cases.
She argued that it was for juries to decide whether a country was an enemy state.
She told MPs: "The DPP's claim of needing further evidence from the Government and their decision not to publish the China audit has I think become conflated.
"These men were charged, as I understand it, with an offence under Section 11C of the Official Secrets Act. And the offence is to pass on information which might be directly or indirectly useful to an enemy.
"When the Crown Prosecution Service are building their case, presumably they have a witness and presumably that witness was the deputy national security advisor who was there to answer the question - is China an enemy.
"Without that evidence, there's no point in charging them in 2024.
"What has changed since 2024?"
Former Security Minister Tom Tugendhat added: "The statement he has read out, no doubt under instruction, has thrown out more chaff, set up more strawmen than a Russian disinformation campaign.
"It is pure fabrication to claim that those are the relevant points and sadly he knows it.
"The chair of the Foreign Affairs Select Committee set out exactly the right question. That is that the DPP has asked a very clear question. Why have we not had the information in time for these cases to proceed?
"He didn't say the evidential threshold wasn't met. If it had not been met, then this arrest should never have happened and he should be rightly calling the head of MI5, the head of the counter-terrorism police and a Treasury solicitor before him for abuse.
"He's not doing that because he knows the threshold was met. Instead, he should read the words of the DPP. The threshold is no 'longer' met. No longer means there has been a change. Something has changed.
"From the way the Government has very carefully used language, it sounds much more likely that something has not been done.
"Simply ignoring an order is not the same as not receiving one. This statement advertises that the UK is not willing to defend itself against threats from hostile states."
Mr Jarvis said ministers cannot "retrospectively change policy that existed" under previous Conservative administrations.
The security minister told MPs: "Now, I've listened with interest in recent days to advice from former Conservative ministers on how the UK should now define our approach to China.
"But I must remind them and the House that what matters is what their policy was in government."
He later said: "The CPS (Crown Prosecution Service) decision to drop the case was not influenced by any member of this Government, nor special adviser or senior official."
Commons Speaker Sir Lindsay Hoyle told MPs over the China spy scandal: "I am very angry".
Sir Lindsay continued: "It is of the utmost importance to me that all those who work in this Parliament are able to undertake their activities securely and without interference.
"I continue to seek advice from officials on what further steps might be taken to pursue the issue in other ways.
"I will be issuing an updated security guidance to members later today."
Sir Lindsay said: "I think there is something the Government ought to be aware of - it is this Parliament that has been spied on. It is MPs' offices that have been infiltrated.
"And as it stands, what we have seen is the payment for spying on what I believe should be protected.
"At this moment, I feel we haven't had the protection. I certainly don't blame the minister.
"I know that he will be answering a lot in his statement and taking many questions, but I do want to put on record - I'm angry and disappointed.
"My job is to protect Parliament. I feel we aren't getting that protection."
MI5's National Protective Security Authority told MPs, peers, councillors, candidates and parliamentary staff to "remain alert and trust their instincts".
The intelligence agency said spies could pose as "diplomats, journalists, academics or lobbyists", or use people working in those fields as "proxies" for espionage work.
MI5 Director General, Sir Ken McCallum, said: "When foreign states steal vital UK information or manipulate our democratic processes they don't just damage our security in the short-term, they erode the foundations of our sovereignty and ability to protect our citizens' interests.
"Everyone reading this guidance cares deeply about the role they play in UK democracy. Take action today to protect it - and yourself."
Security minister Dan Jarvis told the Commons the advice would help politicians "better understand the threat" posed by countries including Russia, China and Iran.
As well as urging vigilance at home, MI5's advice warned that foreign intelligence services could seek to exploit politicians' overseas travel to access their data or use financial donations as a route to influence.
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