Sunak and Hunt keep talking – but thanks to Zahawi, no one is listening

Editorial: Constant revelations about misbehaviour, rule-breaking, cover-ups, political manipulation and tax avoidance have drowned out whatever messages the government has sought to get across

(Dave Brown)

It is something of a bitter irony that the moment the Conservatives start to at least make some sense on economic policy, the public has ceased to listen.

For the next few weeks, as for the last year or more, the constant revelations about misbehaviour, rule-breaking, cover-ups, political manipulation and tax avoidance have drowned out whatever messages the government has sought to get across. Even Rishi Sunak’s day of “levelling up” was overshadowed by a motoring offence and a fixed penalty. For as long as Nadhim Zahawi is in post, there will be little interest in any little homilies about taxation and the Tories’ ambitions for Britain.

In his keynote speech at Bloomberg, Jeremy Hunt was certainly aiming high, though. Having been through the traumas of recent years, and with a recession already under way, some may not have quite believed their ears when the chancellor – apparently with a straight face – talked about building “the most prosperous country in Europe” (which implies national income per head doubling over some unspecified time period to overtake the rich citizens of Luxembourg, Lichtenstein and Ireland). If it happens, even the fit and youthful Mr Hunt might not be around to see it.

Mr Hunt was in more realistic territory on tax and inflation. Given where the economy is now, after the unrestrained chaos of the brief Truss interregnum, he is right to put the defeat of inflation at the centre of policy, and to point out to his critics on the right that getting price rises down is the best form of tax cut. There is a constant drumbeat within the Conservative Party demanding immediate tax cuts, even at the expense of inflation, public services, borrowing and the party’s frazzled reputation for competence. Mr Hunt is right to resist the call for tax cuts; though the ones he’s in the process of imposing could be more fairly distributed.

But no one is listening. One of the most baleful consequences of the Zahawi tax scandal is that the public are unwilling to take lectures about paying onerous taxes from those who take such pains to avoid their own tax obligations – as Mr Zahawi is accused of, and has partly admitted. At any rate, Mr Zahawi still made a reputed £27m capital gain, which must be some comfort to him in his current travails, and damage to his reputation: as the head of HMRC reminded us, there are no penalties levied for “innocent” mistakes.

The Zahawi scandal was particularly ill-timed, as many of Britain’s hard-pressed employees and self-employed businesspeople struggle with their own tax returns. They know that if they miss the end-of-month deadline, they will not be in the position that Mr Zahawi was in when he ran into trouble.

Neither has it been entirely forgotten that Mr Sunak and his extremely rich family have benefited from non-domiciled status and family trusts to protect their wealth – again an extravagant privilege beyond the dreams of others.

It should be shocking – but sadly isn’t – that Boris Johnson, when prime minister, fixed himself up with an £800,000 “credit facility” with a private individual without declaring it publicly – with the assistance of someone in the running to be chair of the BBC. Most of us would go to the bank, and most of us would be laughed at. The £320,000 Matt Hancock earned as a contestant on a TV show when he should have been working in parliament seems almost trivial in this context.

It all adds to an impression that the Tories are not only out of touch with a nation grinding its way through a cost of living crisis, but that they no longer sail by the same moral compass as the rest of the nation. The bond of trust that has to exist between government and people has been fractured, and it is difficult to see how it might easily be repaired.

However, an immediate first step would be for the prime minister to ask Mr Zahawi to stand aside, ie take leave from government and his party role until the independent adviser Sir Laurie Magnus has completed his report.

In the unlikely event that Mr Zahawi is exonerated, he can return to his duties, at least for the time being. If Mr Zahawi has broken the ministerial code then he should of course be sacked. If the breaches are sufficiently grave, then Mr Sunak should put pressure on Mr Zahawi to leave the Commons. An embarrassing loss at a by-election in Stratford-on-Avon is a price worth paying for the restoration of some sense of propriety to government – “integrity, professionalism and accountability at every level”, as Mr Sunak promised.

The Zahawi tax scandal offers an opportunity for Mr Sunak to show some strength and to stamp his authority on his party. He cannot enjoy having Keir Starmer chant “weak” at him every week in the chamber, and for his MPs to openly defy him.

If he cannot lead a party that still has a substantial parliamentary majority, then there isn’t much point in Mr Sunak carrying on. He needs to act to close down the Zahawi tax scandal – and quickly.