Officer made a safeguarding report about children's living conditions but MP says it was "invalid".
The government has approved the project in Thirsk as part of its Access for All programme.
Conservative Karl Arthur's switch leaves Tories with a slimmer North Yorkshire Council majority.
The watchdog says it has "found no evidence of any other potential offences" by the think tank.
The mayor is blaming sluggish progress on "the disastrous legacy of the previous government".
Business Minister Kevin Hollinrake says United Utilities needs to "get their act together".
Minister Kevin Hollinrake answered questions from an audience of postmasters wrongly accused of theft.
A spokesperson for the Speaker said he "ran out of time" to call the MP during PMQs.
Kevin Hollinrake is asked if he'd take another £10m from Frank Hester, despite claims of 'racism'.
