I often given clearances through the Heathrow/City Zones of "CAN YOU ACCEPT A VFR CLEARANCE LEVEL AT xxxxft PROVIDING YOU CAN REMAIN VMC"
The type of clearance is irrelvant in this case, as it appears that the naughty boy was lying.
Maybe the MSA is 2000ft or lower, so the controller cleared him to that, to get him VMC, to offer the VFR crossing. So the controller could still have had terrain spearation in mind.