Downing Street has repeatedly refused to say whether Rachel Reeves broke the Ministerial Code over her failure to obtain a rental licence for her family home.
Sir Keir Starmer is seeking to draw a line under the row surrounding the Chancellorâs breach of local council housing rules after she apologised for the error on Wednesday.
Facing questions about the extent to which the mistake had been probed by the Prime Minister and his ethics adviser, No 10 insisted that the Ministerial Code sets out that an apology is a âsufficient resolutionâ in certain cases.
But a spokesman repeatedly declined to say whether the standards rules had been breached, or if the Prime Minister or independent watchdog Sir Laurie Magnus had seen evidence of Ms Reevesâ version of events.
In a letter to the Prime Minister on Wednesday, the Chancellor admitted she did not obtain a âselectiveâ rental licence required to rent out her London home and apologised for the âinadvertent errorâ.
In his response, Sir Keir said he was happy the âmatter can be drawn to a closeâ after consulting his ethics adviser, who decided against launching a probe.
Opposition critics have argued the Government has questions to answer and demanded an investigation.
Asked on Thursday whether the Prime Minister, a former director of public prosecutions, believed that ignorance of the law was a defence, a No 10 spokesman indicated he did not.
Asked why he accepted Ms Reevesâ reason for the breach, the spokesman said: âRegrettably she was not aware the licence was necessary, did not obtain the licence before renting the property out.
âSheâs explained it was inadvertent mistake and as soon as it was brought to her attention, she took immediate action and applied for the licence⌠the Ministerial Code makes clear that in certain circumstances, in consultation with the independent adviser, an apology is a sufficient resolution.â
The exchange of letters was published late on Wednesday evening, when Ms Reevesâ failure to obtain the licence was revealed by the Daily Mail.
Downing Street rejected suggestions that the Chancellor had got away âscot-freeâ after a âstitch-upâ between Sir Laurie and the Prime Minister to avoid spooking the markets.
âI donât accept that framing at all,â a spokesman said.
Ms Reeves had told the Prime Minister that âregrettablyâ she and her family were not aware a licence was needed in their area of Southwark in London, where they rented out their home for ÂŁ3,200 a month after moving into No 11.
Southwark Council requires people renting out their properties in certain areas to get a licence in advance, and not doing so can lead to a prosecution or a fine.
The Chancellor is understood to have relied upon the advice of a letting agent, which said it would advise if a licence was needed.
Asked if the Prime Minister stood by his assertion that âlaw-breakers cannot be lawmakersâ â a statement he used to criticise Boris Johnson over the partygate scandal in 2022 â a No 10 spokesman said: âYes.â
Ms Reeves told Sir Keir: âThis was an inadvertent mistake. As soon as it was brought to my attention, we took immediate action and have applied for the licence.â
She added: âI sincerely apologise for this error and I would be happy to answer any questions you may have.â
In his reply, the Prime Minister said he had consulted his independent adviser, adding: âHe has advised me that in relation to your inadvertent failure to secure the appropriate licence for your rental property â and in light of your prompt action to rectify the position, including your apology â further investigation is not necessary.â
âAn apology is a sufficient resolutionâ in such cases, the Prime Minister said.
Sir Keir added it was âregrettable that the appropriate licence was not sought soonerâ but he believed the Chancellor was âtreating this matter with the urgency and seriousness it deservesâ.
Conservative leader Kemi Badenoch said Ms Reeves needs to âbe on top of her paperworkâ following the mistake and pointed to the Chancellorâs previous public support of councils using selective licences.
Ms Reeves, who is also MP for Leeds West and Pudsey, posted on her verified Facebook page earlier this month welcoming Leeds City Councilâs decision to expand its use of the scheme.
Mrs Badenoch said: âThe more I hear about the story, the more questions there are to answer. This is a 2004 statute that was brought in by Labour.
âShe has tweeted about how it should be extended, and yet she wasnât following it herself.â
The Tory leader added: âShe is the Chancellor. She needs to be on top of her paperwork. She was aware of this legislation. I think there should be an investigation.â
Sir Keirâs decision to back Ms Reeves comes while she prepares to deliver a potentially difficult Budget next month as she seeks to plug a hole in the public finances.
It also follows several high-profile exits from Government as a result of scandals, including former deputy prime minister Angela Rayner who stepped down after a row over her tax affairs.
Lord Mandelson was sacked as ambassador to Washington after details of his relationship with the dead paedophile financier Jeffrey Epstein came to light.
Southwark Council has been contacted for comment about the selective licence.
