Robert Jenrick has defended his decision to approve a controversial planning application by a Conservative donor as the Metropolitan Police said they would not be taking any action.
The housing secretary told MPs he had acted in “good faith” and “within the rules” when he backed Richard Desmond’s scheme for 1,500 homes in east London.
He said he had handed relevant documents to No 10’s top official.
Labour called for an inquiry to clear up the “bad smell” over the decision.
Mr Jenrick’s decision to grant planning permission in January for Mr Desmond’s company Northern & Shell to build on the Westferry Printworks was challenged by Tower Hamlets Council, and the secretary of state has said what he did was “unlawful by reason of apparent bias”.
The application, previously rejected by Tower Hamlets Council, was approved the day before the introduction of a new council community levy which would have meant the company paying an additional £40m.
The housing secretary has been under political pressure after it emerged that Mr Desmond raised the issue with him at a Conservative fundraising dinner in November and, two weeks after planning permission was granted, donated £12,000 to the Conservative Party.
Pressed on the issue in the House of Commons, Mr Jenrick said it was “not unusual” for the secretary of state to reach a different conclusion from councils or planning inspectors on the most “contentious” applications.
“I took that decision in good faith, with an open mind, and I am confident all the rules were followed in doing so,” he told MPs.
He said “all the relevant information” relating to the decision had been handed to Cabinet Secretary Mark Sedwill, the UK’s most senior civil servant, who opposition parties are demanding hold an inquiry.
Requests for further documentation would be considered where appropriate, he added, bearing in mind the “legitimate interests” of the parties involved and the fact the application had yet to be settled.
Mr Jenrick rejected claims of impropriety in relation to his contacts with Mr Desmond.
He said officials were aware he had “inadvertently” found himself sitting next to the businessman at the November dinner and he had been clear that he could not discuss the application when Mr Desmond raised it.
“I discussed and took advice from my officials in the department at all times,” he added.
In response to a question from the SNP’s Tommy Sheppard, he also revealed that the matter had been looked into by the police following a complaint and he had been told there were “no criminal matters to investigate”.
The Met confirmed it received an allegation on 27 May relating to a property development in east London.
In a statement, it said. “The details were assessed by officers from the Special Enquiry Team who concluded the information provided did not meet the threshold for a criminal investigation.
“There will be no further police action at this time.”
In giving the project the green light, Mr Jenrick overruled the government’s planning inspectorate which said the development needed to deliver more affordable housing in London’s poorest borough.
The council subsequently challenged the decision, forcing the secretary of state to back down and to admit what he did was “unlawful by reason of apparent bias”.
Local councillors asked the High Court last month to order the government to disclose emails and memos around the deal.
Rather than doing this, Mr Jenrick’s lawyers conceded the timing of his decision “would lead the fair-minded and informed observer to conclude that there was a real possibility” that he had been biased.
Labour said Mr Jenrick must do more to reassure people about the integrity of the planning process and dispel concerns that it could be “auctioned off”.
“The only disinfectant that can clear the bad smell hanging around this decision is honesty,” said shadow housing secretary Steve Read.
“Mr Jenrick must immediately publish all correspondence about this case to allow full public scrutiny of what he’s been up to.”