Sunak has no one to blame but himself when it comes to Zahawi

It was already apparent that Zahawi’s tax affairs were problematic, so why did Sunak choose to elevate his position?

According to Chris Philp, the policing minister (a flick of irony there), when the then-new prime minister Rishi Sunak appointed Nadhim Zahawi as chancellor of the Duchy of Lancaster, minister without portfolio and chairman of the Conservative Party in October of 2022, there was no problem.

No problem at all: “As far as I’m aware, the point at which Nadhim Zahawi was appointed to his current position by the current prime minister, the prime minister was not aware of the previous back and forward earlier in the summer. And he was told there were no outstanding issues — taxation issues — applicable at that time.”

That statement is also in line with the clarification statement issued by Zahawi a few days ago, in which the troubled minister said: “When I was being appointed chancellor of the exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time… following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error. So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due, which was the right thing to do.”

“This matter was resolved prior to my appointments as chancellor of the duchy of Lancaster and subsequently chairman of the party I love so much. When I was appointed by the prime minister, all my tax affairs were up to date." And so Sunak gave Zahawi the jobs.

Was this a mistake — an error of judgment on Sunak’s part? Was he deceived? As a former chancellor himself, and with some exposure to the ways of the wealthy, should Sunak have been more circumspect about Zahawi? Should he have dropped Zahawi from any government or party role at that point?

The answer is surely “yes”.

It was already perfectly apparent long before that Zahawi’s tax affairs were problematic, Sunak would have known this full well, from public sources and private information. The very fact of an HMRC investigation should have been sufficient to stop Zahawi from being offered a ministerial position. Sunak made a mistake, to say the least, in appointing Zahawi and then backing him through the recent storms.

Perhaps, Sunak’s adviser on ethics, Sir Laurie Magnus will furnish Sunak with ample cause to fire Zahawi. Indeed, such is the scale of the scandal that it might not be right for Zahawi even to continue as MP for Stratford on Avon. It would be appropriate for Sunak to act with Shakespearean violence, and dispatch Zahawi rapidly: “If it were done when ‘tis done, then ‘twere well it were done quickly.”

As things stand Sunak looks hopelessly weak. Nice, clever, and diligent — but weak, and not a leader.

Much damage has been done to this still–young administration by indulging Zahawi. From the moment the original story was broken by in The Independent in July, Zahawi has been under siege, and engaged in an attempt to save his political career. He made a series of public statements that seem now to be at odds with what we know to be true. Increasingly he has become a liability. Perhaps Sunak, as with the general public, felt he should take Zahawi at his word — the line James Cleverly used when trying to defend Zahawi on the Sunday media round.

Unlike the general public, however, as prime minister and party leader Sunak was in a position to know and find out much more than any mere journalist. It must have been clear to Sunak, from the preliminary discussions Zahawi had with cabinet office civil servants that Zahawi had had to pay a penalty charge to HMRC for his “careless” behaviour.

We all know now that the word “careless” isn’t a synonym for “whoops!” but a technical term basically meaning negligent. The very fact that a minister should be caught up in such an argument with HMRC should disqualify them from high office. All the more so for HMRC feeling justified in levying such a substantial penalty.

It is far more serious than a fixed penalty notice. As a former chancellor, Sunak was also cognisant of the meaning of “careless” in this context and the seriousness of the offence it implies.

So why, despite all this, did Sunak offer Zahawi such a high-profile, high-pressure role as party chair — one of the most visible of faces as the party heads towards a general election? None of the possible answers reflect well on Sunak:

Firstly, he somehow didn’t ask or know what was really going on with Zahawi, which seems naive, incompetent, and not quite credible. Alternatively, he gave Zahawi the benefit of the doubt, which was foolish. Strong leaders, such as Thatcher and Blair shoot first and conduct inquiries later. The third possibility is that he knew about the transgression but didn’t care, which makes his commitment to integrity, transparency, and professionalism look absurd. Or, finally, that he knew, and cared, but needed to include Zahawi in his leadership campaign and then cabinet, to try and unify his new administration and the party. (Zahawi endorsed Sunak for leadership after Truss resigned. He had initially endorsed Boris Johnson, and switched to Sunak after Johnson ruled himself out of the contest).

All that proves, rather like having to appease Suella Braverman or make constant U-turns, that Sunak is not fully in charge of his party.

In any case, Sunak should never have appointed Zahawi, nor compounded his error by defending him after yet more revelations poured out, such as the fact that last year the civil service effectively blocked Zahawi from receiving a knighthood, after cabinet office background checks with HMRC revealed (presumably yet again) problems with his tax affairs.

Even last week Sunak told the Commons at PMQs that Zahawi “has already addressed this matter in full and there’s nothing more that I can add". Sunak’s official spokeswoman said Mr. Zahawi "has spoken and been transparent with HMRC...I don’t know whether the prime minister has reviewed it in full, but I do know that he takes Nadhim Zahawi at his word.” Asked if Mr. Sunak was confident he knows everything he needs to know, she responded "yes" and said that the prime minister had full confidence in Mr. Zahawi.

Now, though, it seems Sunak has decided there are still “questions that need answering”.  What has changed since last Wednesday is that more damaging stories about Zahawi have tumbled into the public domain, and with them his unsatisfactory statement of clarification — but Sunak surely knew all about these before, from his own officials.

The current Sunak line is that he was basically conned by Zahawi, and was as stunned as a complaisant country vicar when all these details emerged. What we really need to know now is what Sunak (and Boris Johnson for that matter, who made him chancellor of the exchequer) knew about Zahawi’s tax travails, and when.