Revealed: how Tories covered up pro-EU evidence in key Whitehall report

Tory cabinet ministers and their advisers tried to rig the findings of the biggest-ever Whitehall investigation into EU powers by removing evidence that cast Brussels and the European project in a favourable light, according to a Liberal Democrat minister.

In a devastating intervention, the respected Lib Dem foreign affairs spokesman, Lord Wallace of Saltaire, revealed to the Observer that Tory cabinet ministers and their aides had attempted to impose a “Eurosceptic spin” on the Balance of Competences review because most of the evidence submitted by businesses, foreign governments and other interested parties portrayed the EU as a force for good, which was not what they wanted to hear.

Wallace also said that Downing Street had repeatedly attempted to delay publication of the 32 reports that make up the review – and the evidence submitted to them – until MPs were not sitting, in order to minimise the attention that the press and public would pay to them.

Evidence given to the review by the Japanese and Australian governments, as well as by many top British companies – including Vodafone, Kingfisher, BAE Systems and easyJet – stressed that UK membership of the EU and its single market were important to inward investment, job creation and prosperity. The Japanese government told the review that 1,300 Japanese firms had invested in the UK because it was member of the EU single market. It added: “This fact demonstrates that the advantage of the UK as a gateway to the European market has attracted Japanese investment. The government of Japan expects the UK to maintain this favourable role.”

The serious claims from Wallace, who worked on the review with the foreign secretary at the time, William Hague, will be hugely embarrassing to David Cameron, who has claimed that the EU is becoming too much like “a state”. He has pledged to repatriate powers before an in-out referendum if the Tories win the election, and has refused to rule out campaigning for a no vote if other member states blocked the changes he wants.

The accusations from Wallace follow a highly critical report by the cross-party House of Lords committee on Europe, which accused ministers of “burying” the results of the review and making no effort to publicise its findings, which it said the public had a right to know about.

The review by civil servants was hailed by Hague in 2012 as the “most extensive analysis of the impact of UK membership of the EU ever undertaken”, but none of the reports identified major areas where Brussels obviously had excessive power or reach.

Several reports on the single market and trade and investment were clearly very positive about the EU’s effects on the economy. The report on the controversial issue of “free movement of people”, one Cameron has said he wants to reform, found that it was on balance beneficial to the country. In all the reports, problems and imperfections of the EU’s role were cited, but at no point did they suggest withdrawal might be preferable or in the national interest.

Wallace said the Tories had hoped the review would provide evidence of where Brussels was over-reaching itself. “The Conservatives wanted the review in the coalition agreement because they thought that the evidence would show a strong demand for repatriation of powers, and that it would provide the basis for a British renegotiation agenda.

“However, the exercise demonstrated the opposite of what they had expected, so in some cases they tried to find more critical evidence and, when that failed, they did their best to bury the exercise.”

The peer singled out aides to the home secretary, Theresa May, who he said had tried to block evidence that they felt was not helpful to the Eurosceptic case in relation to EU rules on the “free movement of people”.

“On the free movement of labour report Home Office spads [special advisers] tried to remove nearly every reference to credible pro-free movement organisations like the EEF [Engineering Employers Federation] and the CBI, while stuffing the document with quotations from Migration Watch. They worked very hard to obstruct the use of evidence on the balance between inward and outward flows, including offering an estimate for the number of UK citizens living and working in other EU countries that was half a million lower than any otherwise-accepted figure.”

Wallace added: “On civil justice, the first draft leaned extremely heavily on the evidence provided by a Hong Kong-based lawyer who was an expert on Chinese corporate arbitration, without any evident experience or expertise on EU litigation [because this was one of the very few submissions that was critical of the EU], while sidelining evidence from the Bar Council, the Law Society and the Scottish Faculty of Advocates.” He went on: “After each six-month group of reports was ready, No 10 intervened to delay publication until the day after parliament went into recess, to minimise the attention paid to them,” said Wallace.

“Officials did their best to stick to the balance of evidence returned, supplemented by holding seminars with interested parties around the UK. Some secretaries of state and their advisers, with eyes to their future in the party after Cameron’s departure, wanted to impose a Eurosceptic spin on the evidence that had come in.”

Peter Wilding, director of the cross-party pro-EU membership organisation British Influence, said: “Hundreds of organisations, businesses and individuals put in time and effort providing the review with their assessment of the part Europe plays in their field of activity, and the overwhelming response is that our EU membership is about right. Indeed, for many sectors it is absolutely essential.

“Many Eurosceptics, including in the Conservative party, will no doubt wish the conclusions of review had never seen the light of day. They very nearly got their wish. Ironically, organisations like the TaxPayers’ Alliance have been completely silent about this waste of public money.

“I now urge them to join me and others in calling for a large publicity exercise to make sure the British people are made aware of the evidence unearthed at their expense.” The Foreign Office said the review “drew on over 2,300 pieces of written evidence and many more contributed through consultation events, to provide an objective and transparent analysis, enabling people to judge for themselves how the EU affects on the UK’s national interest”.

Evidence given to the review

Japanese government: “The UK, as a champion of free trade, is a reliable partner for Japan. More than 1,300 Japanese companies have invested in the UK, as part of the single market of the EU, and have created 130,000 jobs, more than anywhere else in Europe.”

BAE Systems: “Generally, we consider that the UK achieves much greater global influence by acting as part of a bloc and that the UK has been particularly successful in influencing the direction and content of EU trade policies.”

BT: “We would be concerned if the benefits – particularly in terms of market access and competitiveness, and valuable EU level action on trade and competition policy, and the single market – were to be jeopardised by a renegotiation of competences where this substantially risked unravelling the existing balance.”

Tata Steel: “Outside Europe other countries are becoming more integrated and forming other trading blocs, and there would be a danger that the UK would find itself isolated and without the necessary power to successfully negotiate trade deals. Therefore for trade negotiations, competence at the EU level remains in the interests of the UK.”

British Chambers of Commerce: “We believe this balance of competences to be broadly appropriate. The UK’s trade and investment activity benefits considerably from the EU’s global commercial, political and diplomatic clout.”

EEF, the manufacturers’ organisation: “The current balance of competence over trade policy is integral to the functioning of the internal market and would, therefore, be difficult to change while remaining part of that market. Trade negotiations are a point where influence and success are achieved by acting as a collective unit, and so competence at the EU level remains in the interest of the UK.”

TheCityUK: “Maintenance of UK membership of the EU is a critical factor in the continued ability of the UK financial and professional services to generate foreign exchange earnings. Withdrawal from the EU would not only throw the UK’s trade relations with the rest of the single market into doubt, but would also lead to the loss of trade and investment benefits in current EU trade agreements with third markets.”

CBI: “The trade boost to other EU states as a result of UK membership, particularly the accession countries of eastern Europe, has an indirect benefit to the UK of increasing prosperity in key export markets for UK firms. This, in turn, can increase demand for UK goods and services.”

Scotch Whisky Association: “The SWA is a strong supporter of maintaining the UK’s active involvement within the EU. In the field of EU enlargement, we see no issues which require subsidiarity or to be repatriated to national level.”

easyJet: “EasyJet is a product of the EU’s deregulation of Europe’s aviation market. Without deregulation we would not exist. EU legislation ensures that passengers have a consistent set of consumer rights and increasingly a common set of safety rules as well.”

Shell International: “Shell sees benefit to the UK being part of the EU. Shell’s business has benefited from the ability to access markets across the EU and co-ordinate operations across member states, for example, linking our business service centres in Glasgow and Warsaw.”

British Bankers’ Association: “The BBA firmly believes that the single market is Europe’s biggest asset; within the single market the City is as much an asset for Europe as it is for the UK. The pre-eminence of London – and the UK more broadly as a global financial centre – is intrinsically connected to the UK’s access to the single market. Without maintaining that access, London could be at risk of losing this status.”

Kingfisher plc: “Kingfisher is a steadfast supporter of the single market.”