Treasury deliberately produced gloomy Brexit forecasts to keep UK in customs union, top minister suggests

During a debate in the Commons Jacob Rees-Mogg, a senior eurosceptic Tory MP, said: "Will my hon friend the minister confirm that he heard from Charles Grant that officials in the Treasury had deliberately developed a model to show that all options other than staying in the customs union were bad and that officials intended to use this to influence policy. If this is correct does he share my view this goes against the independence of civil service."

Mr Baker responded: "I'm sorry to say that My Hon friends account is essentially correct. At the time I considered it implausible. My direct experience is that civil servants are extraordinarily careful to uphold the impartiality of the civil service. I think that we must proceed with great caution in this matter.

"We need to be very careful not to take this forward in an appropriate way. It would be quite extraordinary if it turned out that such a thing had happened. It was correct the allegation was put to me. We need to proceed with great caution because it is essential we continue to uphold and support the impartiality of the civil service."

It comes after a leaked Brexit economic analysis found that Britain would be worse off outside the European Union after Brexit in every scenario modelled.

Charles Grant, director of the Centre for European Reform, said: "I told Mr Baker at Conservative Party conference that I was aware of work in the Treasury demonstrating that the economic benefits of Free Trade Agreements with other countries would be significantly less than the economic costs of leaving the Single Market and Customs Union. 

"I did not say that the Treasury intended to use this to influence policy, or the Treasury deliberately developed this model with a view to influencing policy."