How ‘The Independent’ killed off Nadhim Zahawi’s political ambitions

The ‘boy from Baghdad’ believed he could be prime minister, says Sean O’Grady – but his announcement that he is to step down at the general election puts an end to that dream. His departure from Westminster life, thanks in part to our investigation of his tax affairs, will remain an instructive political fable

Nadhim Zahawi has revealed he will not stand at the next election (PA)

For a fairly brief time in 2022, Nadhim Zahawi – who has announced he will stand down from parliament at the next election – thought he might one day be prime minister.

After all, he enjoyed an excellent “back story”, as a Kurdish-born child refugee from Iraq; he had become wealthy through business; he had proved a successful minister, and had overseen the highly successful rollout of the world-beating Covid vaccine; and, in the chaos of Boris Johnson’s final days in office, he was appointed chancellor of the Exchequer in succession to Rishi Sunak, who had quit in protest at Johnson’s misdemeanours and careless style of government.

After that, he served in Liz Truss’s government before becoming party chair under Sunak.

But renewed interest in his personal financial circumstances forced an independent inquiry, and subsequently his departure from frontline politics in January 2023.

Zahawi’s undoing was a direct result of The Independent’s reporting of his tax affairs in July 2022, which was shortly followed by his withdrawal from the leadership contest.

His downfall remains an instructive political fable...

Why has Zahawi resigned as an MP now?

In short, because it looked possible he could lose the usually safe Conservative seat of Stratford-on-Avon – and because his party seems set on a very lengthy spell in opposition.

In April 2023, when Zahawi, to some surprise, managed to survive his recent scandals to be reselected as the Tory candidate for his seat, there were glimmers that a political comeback – in a senior role, even if it was in opposition – might be possible. Since then, a series of adverse developments have snuffed out any such chances.

At the local elections in May last year, the Conservatives lost control of Stratford’s district council for the first time, with a hefty swing of more than 10 per cent to the Liberal Democrats. A group of dissident Conservatives, calling themselves “Stratford Can!”, planned to stand a candidate against Zahawi, and further slippage in the polls made holding on to the seat look even more difficult.

Zahawi’s reputation has, after all, not been enhanced by the media’s coverage of his exploits. So he may have jumped before he was pushed out by the voters in a humiliating denouement.

What went wrong?

A number of things. While no assumption of “guilt” should be attached to such matters, Zahawi was under investigation by HM Revenue and Customs, as well as the National Crime Agency, over his personal financial affairs – as revealed by The Independent.

Subsequently, Sir Laurie Magnus, the independent adviser on ministers’ interests, expressed concern at Zahawi’s failure fully to declare such proceedings and possible conflicts of interest, real or perceived. As chancellor, after all, Zahawi was ultimately responsible for HMRC, which inevitably complicated matters for him even more.

At any rate, Zahawi kept too much to himself. In the words of Magnus’s letter to Sunak, which led to Zahawi’s final dismissal in 2023: “In the appointments process for the governments formed in September 2022 and October 2022 [by Truss and Sunak respectively], Mr Zahawi failed to disclose relevant information – in this case, the nature of the investigation and its outcome in a penalty – at the time of his appointment, including to Cabinet Office officials who support that process. Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing prime minister.”

What was the substance?

Zahawi made an investment in YouGov, a polling company, which eventually yielded a large capital gain. Normally, this would be liable to capital gains tax, but Zahawi argued that because it was arranged through a trust based in Gibraltar, and in his father’s name, his avoidance of paying £4m in tax was legitimate. HMRC took a different view.

Eventually, there was a settlement, in which both sides agreed that Zahawi should pay a penalty because of his “carelessness” – a term that has a particular meaning in tax law, which is that a person has failed to take “reasonable care” in relation to their tax affairs.

Wasn’t there something about horses, too?

Yes – and the tale is probably just as damaging as the tax matters. Zahawi had previously suffered shame and ridicule when it was discovered, in 2013, that he had claimed £5,822 in parliamentary expenses, paid for by the taxpayer, for electricity at his riding school stables to keep his nags and his yard manager nice and warm. Zahawi “apologised unreservedly”. Despite the humble origins, it seemed that, ultimately, Zahawi didn’t have the common touch or the nous required for political success.

He wasn’t all bad, though?

No. He deserves credit for taking over the Covid vaccine project from Matt Hancock, and for delivering it to international acclaim. He was also a reasonably well-regarded education secretary, and, as chancellor of the Duchy of Lancaster, chaired the committee that organised the funeral of the Queen in 2022.

Those who worked for him attest to his calm, his grasp of detail and his kindness. His resignation letter was also unusually well written, and displayed a certain natural wit (as well as some conceit): “Every morning, as I shave my head in the mirror, I have to pinch myself. How is it that a boy from Baghdad who came to these shores, fleeing persecution and unable to speak a word of English, was able to do as much as I have?”

Was he seriously going to be PM?

Not, probably, in the first contest in 2022, because Sunak and Truss were far more formidable… in the narrow sense of being popular within their party. But he would – like, say, Rory Stewart – have put down a marker and been in a stronger position for the future. A little fancifully, he might have been PM now, preparing for a historic fifth term of Tory government.

What next for Zahawi?

He will doubtless join the queue for a peerage in Rishi Sunak’s resignation honours – but, given the number of more senior ex-ministers, with less complicated personal affairs, ahead of him, he may have to do some hard lobbying.

Maybe he’ll spend more time with his family, the horses and his fortune, as well as taking more care with his tax returns. Had The Independent not got involved, things might have been very different for Zahawi, who, as he says now: “My mistakes have been mine.”