Housing secretary Robert Jenrick has admitted “unlawfully” signing off a 1,500-home development by Conservative Party donor Richard Desmond – in a move that would have saved the billionaire publishing tycoon some £40m.

Labour peer Lord Andrew Adonis has called for the Metropolitan Police to look into the matter, and the Conservative Party leader in Tower Hamlets has resigned from the party altogether because it looks “very suspicious”.

The £1bn project on the former Westferry Printworks on London’s Isle of Dogs was approved in January by Jenrick – despite the council and then the independent Planning Inspectorate both deciding it should be refused over a lack of affordable housing and because it conflicted with local planning policy.

His decision came a day before Tower Hamlets Council approved a new rate for its Community Infrastructure Levy (CIL), which would have increased Desmond’s financial liability to the council by between £30m and £50m.

In March, the council began legal action, alleging that the timing of the decision appeared to show bias. It asked the High Court to order the government to disclose documents that, it argued, would show Jenrick was influenced by a desire to help Desmond save money by avoiding the charges.

Faced with the prospect of having to publicly release documents relating to the decision, Jenrick accepted his decision letter was “unlawful by reason of apparent bias” and confirmed it was deliberately issued before the new CIL policy could be adopted. He agreed planning permission should be quashed and decided by a different minister.

A High Court order states: “In pre-action correspondence, pursuant to the duty of candour, the first defendant [Jenrick] explained that the DL [decision letter] was issued on 14 January 2020 so that it would be issued before the claimant [Tower Hamlets] adopted its new local plan and CIL charging schedule.”

It adds: “He [Jenrick] accepts that the timing of the DL, on the eve of the approval of the claimant’s new CIL charging schedule, thereby avoiding a substantial financial liability which would otherwise fall on the second defendant [Westferry Developments Ltd], would lead the fair minded and informed observer to conclude that there was a real possibility that the first defendant was biased in favour of the second defendant.” 

Cllr Wood, who resigned as leader of a local Conservative group after Jenrick’s decision, has called for the council and Greater London Authority (GLA) to put more information about the matter in the public domain.

He told The Times: “The reasons for the minister’s decision and his correspondence with the developer should be put in the public domain and investigated by the appropriate authorities.”

Speaking to HuffPost UK, he added: “The whole thing looks very suspicious and I was so angry that I chose then to quit as leader of the Conservative group on the council and as a member of the Conservative Party.

“For me it was the final nail in the coffin. I had decided to stay in because I thought the ability to write to ministers as Conservative group leader was worth me suppressing my increasing doubts about the direction of the party nationally. But Jenrick’s decision was so shocking that I could not continue.”

Lord Adonis tweeted: “I hope the Metropolitan Police are looking at this. By taking the decision he did, Jenrick excused this party donor £40m in tax, maybe more in other respects. His lawyers appear to have conceded it was done in a highly inappropriate manner & Jenrick won’t disclose documents.”

Tower Hamlets mayor John Biggs said: “We may never know what emails and memos the secretary of state received before making his decision and what influence they had, but his reluctance to disclose them speaks volumes.

“In siding with the developer, he went against not only the planning inspector but also the council’s strategic development committee and the residents whose lives would be directly impacted by this scheme.”

Tower Hamlets planning chief Cllr Rachel Blake added: “We were shocked that in taking his decision, the secretary of state went against the government’s own planning inspector’s recommendation.

“The timing, which meant the developer would have been able to pay significantly lower infrastructure costs than if it had been made the following week, meant we had no choice but to challenge it through the courts.

“We feel strongly that these decisions should be taken locally but where they’re not, our residents must still be able to trust the integrity of the processes that are followed.”

In an interview with Sky News on Wednesday, Jenrick told Adam Boulton the application was decided “on its merits” and done “without any actual bias”.

He added: “But clearly the way that the process was run gave rise to some concerns and so that’s why we’ve chosen to quash the decision.”

The Ministry of Housing, Communities and Local Government did not respond to HuffPost UK, but a spokesperson told The Times: “While we reject the suggestion that there was any actual bias in the decision, we have agreed that the application will be redetermined.”