The sale of 25 council houses to a company partly owned by the son of the deputy Prime Minister, Mr John Prescott, achieved a "satisfactory price" for the taxpayer, an official inquiry decided yesterday.
The inquiry's report drew an angry response from Mr Tony Fee, a councillor in Mr Prescott's Hull constituency, who claimed the houses had been undersold.
Mr Prescott ordered the inquiry after allegations surfaced this week that Wyke Developments - in which his son, Jonathan, owns a 20 per cent share - had bought the council properties in Hull for a bargain price of £5,300 each. The properties were worth about u £20,000 each. The allegations suggested that Ministers at the Department of the Environment, Transport and the Regions (DOE), of which Mr Prescott is head, were involved in the sale.
Earlier this week DOE internal auditors arrived in Hull to begin their inquiry into the sale, which was conducted by the North Hull Housing Action Trust (HAT) and the Government Office (GO), but the report found there was "no impropriety" involved in the sale of houses to Wyke Development.
The auditors' report said: "Nothing we saw in the papers at the HAT or the GO leads us to conclude other than that the sale was handled with full regard to the requirements of regularity and propriety."
Indeed, the auditors went on to say that HAT had secured a better price than it could have expected for the council houses, given the cost of possible improvements and the use of the properties for renting. The report also absolved Mr Prescott and his department of any prior knowledge of the sale, saying that ministers had not been informed of the sale by the North Hull Housing Action Trust until it had been approved by the GO.
Criticism was reserved for HAT, which, the report found, had carried out a "limited" financial inquiry into Wyke Developments after it had put the sale of the houses out to tender.
Mr Prescott, who blamed the allegations on his critics within the Hull Labour Party and Mr Fee, welcomed the report and insisted the issue should now come to an end. Insisting that his critics should now apologise, he told BBC R4's The World at One programme: "There has been an absolute clearing not only of my son's involvement, but all these people who have suffered the stress and harassment . . ."
On the same programme Mr Fee expressed his "surprise" at not being contacted by the auditors since he had initially raised the issue.