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Justice minister stands down over 'rent deal'

Malik 'pleased to have chance to clear his name

The expenses scandal engulfing Westminster claimed its biggest scalp yet yesterday after a junior minister stepped down amid a row over his use of parliamentary allowances.

Shahid Malik, the Justice minister, lost his post amid allegations that he had breached the ministerial code by paying reduced rent for his constituency flat in Dewsbury, West Yorkshire. The deal is the subject of the first-ever investigation by Sir Philip Mawer, appointed to advise the Prime Minister on the ministerial code in 2007. He is expected to complete the inquiry within days.

Mr Malik has stopped claiming his ministerial salary of £30,851 for the investigation. Downing Street said he would be reinstated should he be cleared of breaching the code. He has been accused of paying a heavily-subsidised rent on the property of under £100 a week but has refused to comment on the allegation. All ministers must clear any possible conflict of interest in their financial dealings with the Cabinet Secretary, Gus O'Donnell.

"Because that allegation would represent a potential financial benefit, and that potential alleged benefit was not declared as part of his ministerial declaration, this could represent a breach of the ministerial code," the Prime Minister's official spokesman said. He added that the accusations "at this point remain accusations and it is important Sir Philip establishes the facts".

Mr Malik's constituency Labour party last night said that it gave the MP its unanimous support and that his integrity was still intact.

Mr Malik, who was a rising star in the party, decided to step down after speaking with the Prime Minister yesterday morning. He had shown little remorse until that point, declaring on television hours earlier that his actions had been "one million per cent by the book". Mr Malik later issued a statement, saying he was "pleased to have this opportunity to clear my name".

"I would like to make it clear this inquiry has nothing whatsoever to do with my expense claims but relates to an allegation regarding my rent which, if true, would breach the ministerial code," he said. "I am confident there has been no such breach and look forward to the findings of the inquiry so that I can continue to serve my constituents as their MP and the country as a minister with my head held high."

Mr Malik had claimed £66,827 from the second home allowance over three years, the highest of any MP. He spent the money on his home in Peckham, south-east London. Despite the size of the claim, he said he was "as straight as they come". He also claimed £2,600 for a home cinema system. Taxpayers paid half the bill after the fees office told him he had exceeded the limit.

He refused to repay the money that he said was legitimately his, but said he would donate the amount to good causes in his constituency "as a gesture". He also claimed £730 on a massage chair, arguing "legitimate expenditure" due to back problems. After allegations over his use of expenses were revealed in The Telegraph, he admitted the rules on expenses were "in complete tatters". He added: "With hindsight, I think every MP in this country would have done things differently. And for that collectively, on behalf of all MPs, of course I apologise."

The Taxpayers' Alliance has described Mr Malik as "shameless".

The Tory leader, David Cameron, warned yesterday that Parliament was at a "dangerous" moment in its history. "The decisions we make and the actions we take will help determine the future path of our politics and our Westminster government," he said.

Five hours: Two stances

"I have absolutely nothing to apologise for. I have done nothing wrong ... I went one million per cent by the book." Shahid Malik, 8.30am

"I spoke with the Prime Minister this morning and we agreed that the best way forward ... was for me to step to one side as an interim measure." Shahid Malik, 1.30pm