A Labour thinktank that helped Keir Starmer into No 10 has said it is making a “clean break” from the past after its former director, Josh Simons, resigned as a minister over a report falsely linking journalists to a “pro-Kremlin” network.

The board of Labour Together distanced itself from Simons’ decision in 2023 to hire a lobbying firm to investigate Sunday Times, Guardian and independent reporters who were looking into its failure to declare more than £700,000 in donations.

Simons, who led Labour Together at the time and commissioned the £36,000 report, stepped down as a Cabinet Office minister on Saturday over the scandal.

However, Labour Together’s activities remain under scrutiny, with the Conservative leader, Kemi Badenoch, saying Starmer should cut ties with the thinktank and return its donations.

“Simons has resigned so it’s clear Labour Together is utterly finished as an organisation,” she said. “Keir Starmer must tell us immediately if he will now end Labour Together’s links with his government and return the tainted money they’ve donated.”

A number of Labour MPs have said they were disappointed with Starmer’s response to the scandal. Karl Turner wrote on X that it was “spot on” that there should be a wider investigation into the activities of Labour Together, while Clive Lewis said Simons should have resigned or been dismissed weeks ago and the delay “speaks volumes”.

Simons was in charge of the organisation when it commissioned Tom Harper, a lobbyist from Apco and a former Sunday Times journalist, to investigate the source of stories about Labour Together’s failure to declare £730,000 in donations.

The reporting failures at Labour Together between 2017 and 2020 happened under Morgan McSweeney, who later became Starmer’s chief of staff, and led to fines from the Electoral Commission.

Simons had said he was surprised and furious about the scope of the Apco report, which went into detail about the background and personal lives of journalists. However, the Guardian revealed Simons himself had falsely linked reporters to a “pro-Kremlin” network in emails to GCHQ.

On Saturday, he said his position in the Cabinet Office had become “a distraction from this government’s important work”. In his resignation letter, Simons said he had never sought to “smear [the] newspaper reporters” targeted by Apco.

Simons was subject to a formal investigation by the prime minister’s independent adviser on ministerial standards, Sir Laurie Magnus. Magnus concluded that Simons had not breached the ministerial code but that there was a “distraction and potential reputational damage” in Simons remaining in the government.

In response, Sally Morgan, a Labour peer and chair of the Labour Together board, said:

“Over the past couple of weeks, the board and chief executive have been carefully reviewing all relevant material. The scope of the work carried out by Apco, commissioned by the then director of Labour Together, was indefensible. The board was not shown the contract with Apco. Nor was the Apco report shared with the board.”

She said the organisation had now changed, with the establishment of an audit and risk committee and a whistleblowing policy. Morgan said it was making a “clean break from the past while continuing to support Labour in power. We are determined to ensure we have an organisation which reaches out across the party with a broad base of engagement and support.”

Alison Phillips, the chief executive of Labour Together, said: “We were shocked by revelations about the work undertaken on behalf of the organisation more than two years ago and have cooperated with appropriate inquiries, including that undertaken by the Cabinet Office. Journalists should not have been investigated.”

In his resignation letter to Starmer, Simons said he had commissioned Apco in November 2023 to investigate whether the thinktank’s confidential material had been disclosed through a hack of the Electoral Commission. The contract Simons agreed with Apco for £36,000 was to “investigate the sourcing, funding and origins of a Sunday Times article about Labour Together”.

They would also investigate a series of publications by the freelance journalist Paul Holden, who had supplied the newspaper with material for its story, and stories published by the American reporter Matt Taibbi, “to establish who and what are behind the coordinated attacks on Labour Together”.

After the Sunday Times reported that Apco’s report made baseless allegations about its journalist Gabriel Pogrund’s faith, upbringing and personal and professional relationships, Simons said he was “surprised and shocked to read the report extended beyond the contract by including unnecessary information” on Pogrund.

Magnus said Simons “acknowledges that this perceived gap between his public statements and what he now accepts appears to be a more extensive scope has been damaging”.

Accepting Simons’s resignation, Starmer said: “It is essential that journalists are able to carry out their work without fear or favour, including holding politicians of all parties to account on behalf of the public we serve.”