For the time being former UK chancellor and now Conservative Party chairman, Nadhim Zahawi, who last year settled an unpaid tax bill and paid a penalty to HM Revenue & Customs (HMRC) worth a total of £5 million, remains in his post, in charge of preparing for crucial local elections in May.
For how long is not clear. Prime minister Rishi Sunak has so far refused to sack his friend and has referred the matter to his independent ethics adviser, Sir Laurie Magnus, for a “swift” report on whether Zahawi, a minister without portfolio, has broken the ministerial code. News that the tax settlement included a penalty element reportedly forced Sunak to ask for the report. Pleading that he must await the outcome of this will buy the prime minister a little time, but not much.
Pressure for Zahawi to go from the opposition and some Tory party members has continued to grow. Downing Street is now distancing Sunak from him, while keeping him in place.
His critics point to Zahawi’s adamant insistence last year that HMRC investigations into his affairs were “smears” and his legal threats to those looking into the issue. Clearly someone was being misled. The reason for the tax penalty also remains unclear with Zahawi insisting that the tax authorities have described his error as merely “careless”. Yet the “fool-not-knave” defence is hardly reassuring or a strong case from the man who was at the time of his tax settlement in charge of the nation’s revenue raising machine.
Sunak, who appears to have been partially blindsided by his colleague, is vulnerable. On coming into office as prime minister he promised “integrity, professionalism and accountability”, and, above all his rebranding of the Tory Party after Johnson and Truss, depends on creating an aura of competence – and not “carelessness”.
He also finds himself embroiled in a row about whether the man who was about to become chairman of the BBC, Richard Sharp, improperly assisted Boris Johnson to get a £800,000 loan. He is seen as particularly vulnerable over tax issues after it emerged last year that his wife, Akshata Murty, claimed non-domicile status to avoid paying millions of pounds in tax on dividends from her family’s business empire. Labour leader Keir Starmer pointedly said in the House of Commons on Thursday that “we all know” why Sunak was reluctant to ask his party chairman about “family financial affairs and tax avoidance.”
Part of Sunak’s problems undoubtedly reflect the fact he has come to the job after the Tories have held power for too long. It has all the signs of a party which has become complacent. He has back benches filled with disaffected MPs who do not believe their parliamentary careers are likely to last long and see no reason to be team players.
Against this backdrop, Zahawi looks unlikely to survive.