Inside Politics: Questions to the prime minister

Sunak and Starmer to face off at crunch PMQs and new ONS figures show government borrowing at record high, writes Matt Mathers

(Reuters)

Hello there, I’m Matt Mathers and welcome to The Independent’s Inside Politics newsletter.

Scientists have moved the Doomsday Clock forward by 10 seconds, meaning the world is closer than ever to oblivion – just when you thought the long, dark cold January days couldn’t get any worse.

Things can, of course, always get worse – you could be Nadhim Zahawi, who can hear the clock tick-tocking down on his time as Tory Party chairman as he continues to feel the heat over his tax affairs.

It will soon be seconds out for Rishi Sunak and Keir Starmer as they face off at Prime Minister’s Questions. But will either leader be able to land a killer punch?

Inside the bubble

Our political commentator Andrew Grice on what to look out for today:

Keir Starmer will not lack ammunition on the Nadhim Zahawi affair at prime minister’s questions. Rishi Sunak will doubtless urge him to wait for the outcome of the inquiry he has ordered. Will the Tory chair be sitting alongside him on the front bench, or will he stay away?

Robert Jenrick, the immigration minister, will be quizzed by the women and equalities select committee about the asylum system. The human rights committee of MPs and peers will also take evidence on the rights of asylum seekers.

Michael Gove, the levelling up secretary, and Lisa Nandy, his Labour shadow, will make their pitch to the convention of the north in Manchester.

Daily briefing

Taxing questions

The first two PMQs sessions of 2023 have largely followed the same pattern: Starmer attacking Sunak on public sector strikes and the state of the NHS and the PM hitting back by claiming that the Labour leader is opposed to the government’s anti-strike legislation because he’s in the pocket of unions. Many of those disputes remain unresolved and with more walkouts planned in the weeks ahead, there is every chance Sunak could be tackled on industrial action by Starmer once again when the pair appear before MPs in the Commons later for round three.

But today’s exchanges in the chamber will almost certainly take on a different feel after the Labour leader was gifted additional ammunition in the form of a scandal over the tax affairs of Tory Party chairman Nadhim Zahawi, which shows absolutely no signs of dying down first thing Wednesday morning.

During last week’s session, Sunak told MPs that Zahawi had “addressed this matter in full” after it emerged that the Stratford-on-Avon MP had come to a multimillion pound settlement with HMRC over unpaid tax relating to YouGov, the company he co-founded and the Gibraltar-registered firm Balshore Investments.

We now know that this was not the full picture and that Zahawi’s payment to the taxman included a hefty penalty that was paid at the time when he was chancellor of the Exchequer and, therefore, essentially in charge of the country’s purse strings. With that in mind, expect the PM to face more questions on what advice he was given when appointing Zahawi to his role and exactly when did he find out about the penalty.

Sunak has already ordered his ethics adviser to look into the saga, but his spokesman was yesterday unable to say when the probe would conclude, or if the PM has faith that Zahawi has always told the truth. The nuclear option might have been to sack Zahawi before PMQs today, thereby taking the sting out of Starmer’s attacks, just as Sunak did at the first PMQs of the year on 11 January on private healthcare. Unless there is a big shock this morning it seems that opportunity has passed now that Sir Laurie Magnus’s work is already underway.

If the PM was hoping that by ordering the investigation the story would go away, then he is sorely mistaken. There is another smattering of stories about embattled Zahawi in the papers today, including an exclusive poll by The Independent that found that almost two-thirds of the public, 64 per cent, including 61 per cent of Tory voters, say he should reveal how much he paid to settle the dispute with HMRC. Just 18 per cent said he should not, the survey by Savanta found. Figures of nearly £5m have been reported, but Zahawi has yet to set out the amount.

(Reuters)

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Not out of the woods yet

There was, it seemed, finally some light at the end of the gloomy economic tunnel last week when Andrew Bailey, the Bank of England governor, signalled that we might just have reached peak inflation.

But data published by the Office for National Statistics yesterday showed that government borrowing rose to a record £27.4bn last month, jumping by £16.7bn year on year. Experts said the rise was driven by the cost of energy support for households.

With this in mind Jeremy Hunt, the chancellor, was keen to remind voters that the UK is still very much not out of the woods in recovery terms as he vowed to stick with the “tough decisions” need to balance the books.

“Right now we are helping millions of families with the cost of living but we must also ensure that our level of debt is fair for future generations,” he said.

“We have already taken some tough decisions to get debt falling, and it is vital that we stick to this plan so we can halve inflation this year and get growth going again.”

The chancellor’s comments deal another blow to the handbangers on the Tory back benches who think that the best way to improve an economy that was crashed in part by unfunded tax cuts and borrowing is to implement more tax cuts and potentially more borrowing.

What’s more is that while inflation is coming down, the Bank is still likely to hike interest rates again to 4 per cent on 2 February and further to 4.25 in March before pausing and reassessing the state of the economy, according to a poll of economists by Reuters. For some mortgage holders the pain is only just beginning.

Today’s cartoon

See all of The Independent’s daily cartoons here

(Dave Brown)

On the record

Lord Hague, former Tory leader, on Zahawi tax affair.

“If I was the prime minister I would say I want to resolve this very quickly because it does become a distraction, of course.”

From the Twitterati

Jim Pickard, FT, chief politics correspondent, is stone-walled by Zahawi’s spokeswoman for an article.

“Incidentally, we asked his spokesperson 16 questions but she never replied to any of them.”

Essential reading

• Sean O’Grady, The Independent: What is behind the row over asylum hotels?
• John Rentoul, The Independent: Ed Balls on the ‘shocking truth’ about Tony Blair and Gordon Brown
• Isabel Hardman, The Spectator: Mental health care is the next big scandal brewing in the NHS
• Jim Pickard, Raya Jalabi and Robert Smith, Financial Times: From Iraqi oilfields to Tory HQ - how Nadhim Zahawi mixed business and politics

Inside Politics first appeared in our daily morning email. You can sign up via this link.