Shahid Malik unable to produce receipts or rental agreement.

Sir Philip said that it was "unfortunate" that Mr Malik had not been able to establish a proper audit trail to support his assertions on rent payments.

Mr Malik was able to return to the Government as a junior communities minister after he was cleared by Sir Philip of any breach of the ministerial code of conduct.

On Tuesday, the Prime Minister refused to publish a report by Sir Philip into Mr Malik's finances.

But on Wednesday, after calls for publication from figures including Sir Christopher Kelly of the Committee on Standards in Public Life, Mr Brown backed down and an edited summary of the document was later published.

The Cabinet Office released Sir Philip's full report, with the address of Mr Malik's Dewsbury house omitted, along with the name of his landlord, Tahir Zaman, and his property company, which had been disclosed previously by The Daily Telegraph.

It found Mr Malik had originally rented one property for £320 a month for three-and-a-half years until the end of May 2008. He then moved into the larger property next door for a monthly rent of £620.

In this report, Sir Philip, the Prime Minister's adviser on ministerial interests, said that he was satisfied that Mr Malik had been charged a commercial rent on both properties, but expressed concern at the way in which payments were made on the second house.


He concluded, in relation to the first property: "I am satisfied that Mr Malik was charged a market, not a discounted rent... I am also satisfied that Mr Malik paid the rent agreed."

On the second, larger property, Sir Philp said he was "clear" that Mr Malik had also been charged the market and not a preferential rent.

"However," he added, "there is no tenancy agreement in relation to the house stating the rent", before noting that there were also no receipts available for cash rental payments involved.

"So I am left with the question, not whether the rent Mr Malik says he was charged was preferential, but whether Mr Malik actually paid the rent he... says he was charged," he said.

"Three pieces of evidence appear to confirm that these cash payments were made...

"I conclude that, on the basis of the evidence before me, it is more likely than not that these cash payments were made."

He added: "It is unfortunate, particularly given his public position, that, in respect of that house, Mr Malik did not think of obtaining at the outset a rental agreement specifying in writing the rent to be paid," Sir Philip said.

"He then entered into an arrangement to pay part of the rent in cash, for which payments (name of the property company) did not give him any receipt.

"I understand the point Mr Malik makes about the influence on him of religious and cultural norms in the Muslim community relating to payments made in cash, but the absence of a rental agreement and of receipts meant that he was left without a clear audit trail to show the payments he had made."

Sir Philip said that Mr Malik had told him that, following original disclosures in The Daily Telegraph's allegations, he had asked for a rental agreement to be drawn up and was "actively considering" paying all of his rent in future by direct debit.

"I hope that, in both his own best interest and the wider interest, he will institute arrangements in this respect immediately," Sir Philip said.

Best Excuse's!

Shahid Malik, shortly before stepping down as Justice Minister:

"I think this is a bit of a non-story to be honest. I have absolutely nothing to apologise for. I have done nothing wrong. I have not been at the periphery of the rules. I haven't abused the rules, I have been absolutely at the core of the rules."

Shahid Malik

Shahid Malik: "I'm as straight as they come"

When: May 15, hours before standing down as Justice Minister.

Shahid Malik: cut-price rent at home and claims for £66,000

Mr Zaman, who owns more than 100 properties in west Yorkshire, offered the prospective MP the house next door to his own. The two men shook on a deal that gave Mr Malik generous terms by any standards.

Mr Zaman let him the house for well under the market rate and, when Mr Malik was duly elected in 2005, Mr Zaman offered him a shop unit in the town centre which would be perfect for a constituency office.

Mr Malik duly rented the office at 40 per cent below the market value, ensuring savings for the taxpayer.

But he was also saving money for himself. He rented the house, part of a converted barn complex in the Heckmondwike area, for less than £100 per week. Even when he moved to a bigger, three-bedroom property one door along following his marriage in February 2008, he carried on paying less than £400 per month. Local estate agents said the real market value was £600-700.

Mr Zaman told The Daily Telegraph: “The reason I gave him that house is because he becomes my neighbour, so I don’t mind taking a professional and charging less. It’s better for me.” Asked if he had formal rental agreements with Mr Malik, he said: “On the office yes. I’m not saying nothing about the house.”

Mr Malik told the parliamentary authorities that the Dewsbury house was his main home, enabling him to claim generous taxpayer-funded allowances on his “second” home in London, which he had bought in 2001 for £85,000.

In the first year after he was elected, Mr Malik set about furnishing and refurbishing his London flat, claiming £21,634 in allowances while having modest mortgage interest repayments of £347.50 per month. Some of his expenses claims brought him into conflict with the fees office.

He submitted a bill for £2,100 for a Sony 40in flatscreen TV, only to be told that the maximum allowable claim for televisions was £750. He told the fees office that he was “very upset” at their stance, saying that no one had told him there was a limit on what he could spend. Internal emails between officials in the fees office show that civil servants were taken aback.

“I do not remember him asking if there were limits on a television, just if he could purchase one,” wrote one. “He did not say he was purchasing a £2,100 TV, let alone a 40in plasma one.” A more senior official agreed that “£2,100 for a television is luxurious by anyone’s standards”.

Mr Malik pursued the matter and wrote a letter in March 2006 in which he stated that because no one had told him there was a limit on what he could spend, “from a natural justice perspective I feel a justifiable exception would be the fairest manner to deal with the current situation”.

The fees office refused to reimburse him in full but eventually agreed to give him £1,050: half the cost of the plasma TV, together with £250 for a home cinema system which had cost him £500. His total spending on furnishings in 2005-6 was £6,147, including £240 for wardrobes, £240 for hi-fi speakers and £239 for a dishwasher. In 2006-7 another £1,521 was claimed for furnishings and fittings, including a £671 fireplace, then in 2007-8 Mr Malik spent another £6,274 on household items, including £1,420 for a bathroom, £730 for a massage chair and £510 for a fitted wardrobe.

In total, Mr Malik has spent £66,827 on his second home in London, while paying less than £100 a week for his main home in Dewsbury.

Mr Zaman’s wife Noreen raised questions over the validity of Mr Malik’s claim that Dewsbury was his main home when she told the Telegraph that the house was normally occupied during the week by a constituency worker called Paul. When the Telegraph called at Mr Malik’s constituency office, a Labour party volunteer called Paul Moore would only say: “I don’t live there. It’s as simple as that.”

In the past Mr Zaman, who ran a car and van hire company from a portable building until last December, has been keen to talk up his prowess in property, pledging to invest £15 million in property in his home town. However, he was fined £450 in 2005 for letting an uninhabitable house to a family of five. At the time, he told magistrates he earned £25,000 a year. Mr Zaman pointed out that he had taken over the property with the tenants already in occupation and he was accredited on a council list of approved landlords.

Mr Malik said Dewsbury had been his main home since 2004 and denied subletting his house. He said the “vast majority” of his ACA claims had gone on “food, insurance, council tax, gas, electricity, security and mortgage interest” which were “basic essentials”. He added: “I do believe that the present system is flawed and needs major reform if we are to win back the vital trust of the public. It is a demoralising period for all of us who believe in politics but, as uncomfortable and painful as the Telegraph’s revelations are, I do believe that they will ultimately be seen as delivering a service to our democracy, our politics and our way of life.”

Shahid Malik, his house and the slum landlord.

Shahid Malik MP and Tahir Zaman

Since being elected in 2005, Mr Malik has claimed the maximum amount allowable for a second home, amounting to £66,827 over three years. Last year, he claimed £23,083 from the taxpayer for his London town house, equivalent to £443 per week. The Telegraph can disclose that the “main home” for which Mr Malik pays out of his own pocket - a three-bedroom house in his constituency of Dewsbury, West Yorks - has been secured at a discounted rent of less than £100 per week from a local landlord who was fined for letting an “uninhabitable” house.

Mr Malik also rents a constituency office from the same businessman, Tahir Zaman

Mr Malik’s arrangement means he pays below market rent for his main home while billing taxpayers thousands for his second home in London. His second home claims have included £2,600 for a home cinema system — which was cut in half by officials — and £65 for a court summons for not paying council tax.

Neither Mr Malik nor Mr Zaman would say last night whether they had signed a formal agreement for the lease of the constituency house, although Mr Zaman said the rent was below the market rate. The landlord’s wife said the house appeared to be occupied by a constituency worker during the week.

The case of Mr Malik’s expenses illustrates the potential problems of an MP being able to nominate what appears to be the family home as his second home, enabling him to claim tens of thousands of pounds of taxpayers’ money.

Jacqui Smith, the Home Secretary, faced similar allegations after she was shown to have claimed her family home in Redditch as her second house.

However, the Home Secretary said she had always paid rent to her sister at a commercial rate.

As a minister, she also said she spent the majority of her time in London.

Mr Malik’s arrangements relating to his constituency home will also raise questions as to whether a minister could be beholden to a businessman who offers him discounted rent. Mr Zaman lives next door to Mr Malik’s home in Dewsbury. Mr Zaman and Mr Malik also have a rental agreement relating to the constituency office in a nearby shopping parade. Mr Malik claims for the cost of renting his office from parliamentary office allowances.

Yesterday, following a week of disclosures about MPs’ expenses by The Daily Telegraph, Elliot Morley, the former minister, was suspended from the Parliamentary Labour Party and Andrew Mackay lost his job as David Cameron’s aide.

Today, details of claims made by married MPs are disclosed. A former Cabinet minister is also exposed for over-claiming more than £8,000 on her mortgage.

Mr Malik bought a home in Peckham in 2001 for £85,000 — four years before he became an MP. After being elected to Parliament in 2005, he nominated the property as his “second home” and began claiming the maximum amount available in parliamentary expenses.

During the first year as an MP, he made 13 separate claims for different items of furniture or electrical appliances totalling more than £7,000. The fees office blocked several items and he eventually received £6,147. He also regularly claimed the maximum allowable £400 a month for food.

The most contentious item was a £2,600 home cinema system including a 40in flat-screen television. The fees office paid half, after initially rejecting the claim.

It blocked claims for a portable DVD player and an iPod during the same year.

The spending on the Peckham house continued during 2007-08, with 24 separate claims for furniture, decorating and electrical goods. These included a £671 fireplace, a leather daybed sofa and a £510 fitted wardrobe.

Mr Malik was also reimbursed for a £730 “massage chair”. Last night, the MP said he had a “back problem”.

The Justice Minister said he would repay the £65 he claimed for his non-payment of council tax courts summons.

In total, in three years, Mr Malik claimed £66,827 for the property - £18,173 less than the original cost of the house.

However, the spending on his “second” London home stands in stark contrast to the cut-price arrangements for his constituency property.

Mr Malik’s landlord last night told The Daily Telegraph: “He is definitely paying well under the market value rent.”

When asked if Mr Malik paid £100 a week, Mr Zaman said: “I’m renting [out] the next door [property], [it’s] half the size

of his property, they pay me more rent than what he’s paying me.”

In 2005 Mr Zaman pleaded guilty to letting a house to a family of five despite a council enforcement order classing building as “uninhabitable”.

He was fined £450 and ordered to pay £200 costs.

Mr Zaman receives more than £4,000 annually from Mr Malik in office rent. The money is funded from a separate system of parliamentary expenses.

The landlord’s wife who lives in a neighbouring property said that Mr Malik only used the property at weekends and a member of his staff stayed there during the week.

“He [Mr Malik] is a good friend and neighbour,” she said. “He comes here just at the weekends... Usually he comes here alone.”

Mrs Zaman said a constituency worker she knew only as Paul occupied the house during the week.

Yesterday, when asked whether someone stayed in the property during the week, Mr Malik would only say: “I am happy to confirm that I do not rent it out or derive any income from it.” Last night, in a statement issued by Mr Malik he strongly denied wrongdoing.

He said: “Dewsbury has been my home since 2004 when I moved there a year prior to becoming the MP. Overall I spend the majority of my time in Dewsbury because, although I spent half the week in London when Parliament is in session I spend most of recess at my main home in Dewsbury.

“The vast majority of my costs [on the London house] have gone on food, insurance, council tax, gas, electricity, security and mortgage interest.

“All these costs are regarded as basic essentials in terms of the ACA [expenses system].”

He also said his rejected claims had been a misunderstanding.

He said: “With hindsight of course I would have acted differently on these items but as a new MP, with a Green Book that was full of subjective rules and a guidance team that knew the limits for items, but chose not to share them with MPs, it was inevitable that almost every MP would have items questioned at some point.”

Shahid Malik

Job: junior minister at the Ministry of Justice

Salary: £95,617

Total second

home claims

2004-05: N/A

2005-06: £21,634

2006-07: £22,110

2007-08: £23,083